When using this bracket ,where does the little spacer go?

That braket looks a little different than mine, on my 70's chevy 350 block, but I had to use spacers on the left hand side of the braket with the adjustable sleave,that bolts to the block.
Set it up and look how the belt is, if its angled you will need a spacer(s) if not your in luck. As long as the belt has good tension and not rubbing on the sides you will be fine.