jigeye,
I've dinked around with your picture a bit to more clearly show what I'm going to now try to put into words.

The servo goes into the hole with the output shaft aligned with the centerline. Your picture shows it "backwards", but I'm guessing you simply took the picture to show the relative sizes, not orientation. whatever.... The centerline goes exactly between the two aileron arms. It's fairly obvious that your servo is too large for the hole. I used a Hitec 225 "mighty mini" servo in my 40S. I used it because it fit the plywood, for one reason. It's also lighter than standard servos by a half ounce, for a better reason. And is as strong as almost all standards. It's only about $20 from Tower and works with almost any brand RX.

The plywood tray goes on the outside of the wing surface. It actually places the servo output arms in better alignment to the aileron arms. It's obvious that the one that comes with the ARF doesn't match up to a standard servo. It doesn't have to stay in one piece to work perfectly. I'd saw it into two pieces and glue the two pieces where they'll match up to that big servo, if you stick with that servo. (truth is, I'd use a Hitec225 really) You'll have to open up the wing a bit to take that big servo, but the ply will provide all the strength needed when it's glued over the new hole in the wing.

The servo can go spanwise or chordwise. It won't matter which way just so long as you align the output shaft to the centerline. I've drawn the centerline with a red dashed line.

I've also turned your servo around an placed it "right" over the hole (with the output shaft on centerline). I've also cloned the servo and placed a clone over to the right, oriented chordwise just to illustrate the chordwise lineup. There is no reason to prefer either spanwise or chordwise. Either will work good.