if I understand correctly all I need to do is change the Diaphragm and My D0OF-U distributer is the same as the D0OF-Z.
No. That's a start.
If it is not that simple I am looking for what is different and can I make my -U into a -Z by simply changing "what ever parts".
There are weights and springs that might need to be changed. Also the shaft. Go to the library and look up the breakdown for each. In many cases, a simple "swap" will work, maybe not well, but it will work. I send my to a shop specializing in distributor rebuilds.
I also assumed the "F" column that had COU in it meant Cougar but does that mean Cougar only or also applies to Cougar and Mustang and whatever else etc...
Also Cougar. As a service to Cougar owners that are members of the forum, I included the notation. They do use Ford Engines.
I am really ignorant on motors and distributors as I stated so I am looking to understand and see if I can make this work or do I have to have a 12127-Z body and internals?
Welcome to the club. To set up a distributor, you need what is commonly known as a "Sun Machine", a very expensive toy.
You have two choices: use as is and wait for the correct one to show; send out the one you got for a rebuild.
Jim