Nationwide uses CCC Valuescope and they generate the value of your car based off of real cars that are for sale or have been for sale in the past 90 days. KBB and NADA are both reference guides that mean absolutely nothing and don't represent the actual value of the vehicle. Read the disclaimers for for KBB and NADA. Also look what what they say cars are worth. I've looked up my personal cars and its crazy what they say they are worth and I definitely wouldn't pay or be able to sell them for what they claim.
Also you said you put a bunch of money in it like tranny and other things. What would of happened if you didn't put the tranny in rearend in the car? It would be worth even less. Cars are money pits and require upkeep to keep the car running and last a long time. Just because you put $2,000 worth of work in your car doesn't make it worth $2,000 more.
Finding other mustangs for sale isn't going to help you much because they have already gone out there and looked for mustangs for sale in the area. You can find 10 mustangs higher than what they have but you will also be able to find 10 that are lower than what they have. They go for the ones priced in the middle because that is whats more realistic.
My suggestion is for you to ask for the CCC report and look it over carefully and have them explain every detail to you so that you can possibly find an error and understand where they are coming from.