I want to eventually add a pickup tube to this set up, so there needs to be some clearance to allow for this. I drilled my hole at 3.75" from the very bottom of the keg. This is a pretty common placement for most kegs. On my keg, this is about 1.25 " from where the skirt is welded onto the keg itself.
Another thing to keep in mind when determining where to place your valve is the location of the keg vents. If you place it too close to one of the vents pictured, the flames could come through and heat the ball valve itself a little too much. There should be 4 vents on your keg. I put my ball valve centered in between two of them.
While drilling the hole with the step drill it will get very hot. If you want your tools to last, make sure to use plenty of cutting fluid. Just keep drilling with the step drill until you reach the 3/4" mark. Your weldless ball valve setup should fit right in.