For me, I place it in the folded area...but I pick out the stitches to open up the folded area, sew the design and then resew the folded hem...sometimes it is just easier to make the pillow case from scratch...the burrito pillow case is really easy to make and the embroidery is done before the pillow case is constructed. There is a link with the PDF on how to make the burrito pillow case below...

I downloaded a perfect placement guideline page from somewhere and this is what it says about pillowcases - • Centered both ways on cuff.