Unless shrouded, 3.5 is probably too far Randy. Although it'll probably work. Stopped in summer heat idling might be a problem as it pulls hot air back around from the engine compartment.

1.5" or even closer with the heavy stock blade would be better. 

Sorry Randy, you have a shroud! Of Course, a 69, doh!

I think the optimum placement puts the fan engine side slightly outside the shroud. Like just 1/4 of the blade end on. I heard it described as being just outside, allows the hot air to be directed somewhat 90 degrees to the front of the block. Not all right back at it backing up the flow. A engine with a ton of driven accessories clogging the path probably should follow this, simple setups like we have are fine.

So you are probably fine where it is.

 

I've had very good luck and cooling with this placement on both the 350 and 496.

 

 

cdnpont is the most correct. The blade front (with the bolts) if you took a straight edge it should be toward engine maybe 1/2". So that the twisted end of the blade is just inside the shroud. That is the MOST efficient, moves the most air. The efficiency is in moving the largest amount of air. In/out too far ruins it

PS.. There is some scientific formula for this, beyond my mindset LOL

The way the fan was, it dumped bug guts all over the bottom of my pretty painted hood.

It was completely outside of the shroud.

I guess the best solution is pot the correct water pump on 

Now you got me wondering. I will check the location on my 421 set up tomorrow.