Crew of old ship engaged in exercise (5)
I believe the answer is:
posse
'crew' is the definition.
(I've seen this in another clue)
'old ship engaged in exercise' is the wordplay.
'old' becomes 'o' (abbreviation).
'ship' becomes 'SS' (prefix in ship names eg SS Great Britain).
'engaged in' is an insertion indicator.
'exercise' becomes 'pe' (Physical Education).
'o'+'ss'='oss'
'oss' placed within 'pe' is 'POSSE'.
'of' is the link.
(Other definitions for posse that I've seen before include "Sheriff's assistants" , "Sheriff's party" , "Group aiding lawman" , "Body of constables" , "Sheriff's team" .)