It sounds like your Passive Anti-Theft System (PATS) security system has locked you out, but I bet you figured that out already ;-) I found some instructions for resetting a Mercury Mountaineer, and would imagine it should work for your Montego as well.
A symptom you should also be looking for is whether the flashing red light continues to blink at double time no matter how much time elapses between attempts, or after the vehicle sits for a while it goes back to a normal, slower, blink. If it continues to blink fast, this is a larger problem which only the dealership is going to be able to fix. This is due to the need for reprogramming the PATS system.
- If you have a second key, wait for 15 minutes after trying your normal key, then try it. The regular key might have lost its link with the vehicle, or the transducer in the key may have gone bad.
- If that doesn't work, disconnect the battery for at least 15 minutes (disconnect and walk away). Reconnect the battery. If the light is still blinking fast, it has not fixed the issue. The instructions said, the only way to fix it at this point is to take it to the dealership to get the PATS reprogrammed. If the blinking has slowed down, try to start it again.
Hope this helps.