You need to mount the engine in the location and in the manner described in the plans/instructions. In doing so, it may be necessary to remove a little of the "cheek" pieces for needle valve and muffler clearances.
On pg 29 of the attached manual
http://www.osengines.com/manuals/40-46-65la-manual.pdf
is an exhaust extension IF you need it to clear the side of your fuselage but I doubt that you will.
Make sure you leave at least 1/8 inch clearance around the needle and muffler for movement.