Higher the better really, on a cold still day it'll 'pool' lower and it really isn't pleasant so giving it every chance to get dispersed is your friend. I don't see any reason why you'd be unhappy with locating it above the green dot inside and venting it out there, save for refuelling it. Given the fuel pipe from the tank to the heater will be pure chinesium (likely a thin green plastic pipe) which is in no way fuel rated and WILL leak you'll be buying fuel pipe anyway... so you might as well put the tank somewhere convenient. Or get a bigger one. Or... both. The ones that come in kit form give quite limiting requirements on how near the heater the tank needs to be for it to work. In my experience, tank placement doesn't seem to matter all that much. Except if you have a very long fuel line you'll spend a fair while priming it every time it runs out of fuel before you notice. I have around 3m of fuel line between the tank and the heater and I've had the tank at various heights relative to the heater and had precisely no issues. I've mentioned it before but the fuel smell from the vented tank is ever-present and unpleasant, moreso if you happen to spill it while refilling. I will eventually relocate my tank to somewhere outside the occupied space for this reason and it would make sense for you to plan to do the same from the beginning if you can, especially given you'll be wanting to separate the tank from the heater in any case.
BTW, the exhaust pipe between the heater and that vent is going to get extremely hot when it is running at full chat, 200C+ sort of hot. I have wrapped mine in some exhaust ceramic insulation cloth stuff (nasty, wear gloves!) to lessen the likelihood of fire and/or severe burns if I happen to touch it.
