Engine swap

I am starting an engine swap on my bike and have a question with regards to engine location. If a line is drawn from the rear axle center through the swing arm pivot should the center of the front sprocket be in line with these other two points or should it be slightly higher or lower?
I do not have the original engine so I am not able to compare but I would think that all three points would be all in a line for best results from acceleration and deceleration.
I have also seen bikes with both higher and lower front sprockets so is this much of an issue?
Can anyone give advice on this?

What frame/chassis and what motor is it?

If you draw a straight line from your rear axle, through your swing arm pivot, it should fall right around the top of the counter sprocket on most street bikes. So, the counter sprocket shaft will be below that line. Usually, the chain above the sprockets makes a line parallel to the ground under its own weight. Dirt bikes are another story.

More importantly you want the front sprocket as close to the swingarm pivot as possible to have the least amount of chain stretch / slack when the swingarm moves.

The motor is a Honda NS 400 R and the frame is a Honda RVF 400. I do realize the engine needs to be as far back as I can get it but dropping it down to where the rear axle, swing arm pivot line is at the top of the counter sprocket would put the motor way below the frame.
A friend has a new BMW 900 and his center of counter sprocket is about 1/2 inch above the line. I read in a chassis book about squat and anti squat but am not that savvy with this so perhaps I will try the level chain trick and see where that takes me.

Think it as rear wheel center, sprocket center and swingarm center all in line as being Neutral. At that position, when the bike accelerates, the weight will be transferred rearwards causing the rear end to squat and the front to rise. As the rear drops, with the suspension compressing the force generated is more squat.

So you need some anti squat and that requires the front sprocket to be LOWER than neutral position. Check out the 3 main points relative positions on the stock OEM bikes and that should give you a good starting point.

Because of the original engine configuration of both bikes, and swingarm droop angle, it may be necessary to raise the swingarm pivot from stock position on your hybrid.

Changing sprocket size also has an effect, but start with the three pivot points first

That makes sense when put that way, thanks.