How to deal with an inaccurate oven thermostat
It sounds like the oven needs desperately to be looked at. Please have someone check it out before a fire starts!!!!

The thermometer placement isn't a huge concern. It should be near the middle for general use (top to bottom) and off to the side. Or if you prefer you can just hang the thing in the middle. As long as you can always safely see it it should be fine. If your coils are on the side and not top and bottom put it in the center (where the window would normally be)

Really though I can't stress it enough. If your setting it to 350 and sometimes it is temperature x and sometimes it is temperature x + 100 then you really need to have it looked at before it gets worse.