Peg installed in standard type of harpsichord (6)
I believe the answer is:
spinet
'type of harpsichord' is the definition.
'peg installed in standard' is the wordplay.
'peg' becomes 'pin' (synonyms).
'installed in' indicates putting letters inside.
'standard' becomes 'set'.
'pin' placed inside 'set' is 'SPINET'.
(Other definitions for spinet that I've seen before include "Step in with old harpsichord" , "Old keyboard instrument" , "Harpsichord-like keyboard instrument" , "Instep (anag)" , "Early keyboard instrument" .)