Where do I Drill My Bung-Hole?

It is likely better to run it down into the fuel but you can enter it "high" I would NOT drill it. use a sharp tapered awl to make a hole. This will "roll" tank material in and make a strong area that is easier to weld/ braze etc

You can use an inspection mirror in the sender hole to be sure you are not intruding on some interior "piece." I would NOT use 1/4. I would use at least 5/16 especially if there is EVERY a chance you will run EFI or a larger HP engine. (Mistake I made)

Lots of ways to do this but BE AWARE of fumes. I would stand it on the back edge, fill it with water near to the top and then you can weld/ braze/ solder