Is there a certain distance the ground rod needs to be from the building and service entry? I assume it doesn't really matter where it is as long as it's relatively close to the building. I am also assuming that it does not matter the top of teh ground rod is above or below ground.

No, there is no clearance requirement for a SINGLE ground rod. You can install it on the other side of the building if you want (not recommended). You need less than 25 Ohms to earth or he might make you install two rods in parallel.

Above or below grade does matter. Above grade and the connection must be protected from physical damage. Below grade and the clamp must be rated for direct burial.

NEC 250.53

I try to locate mine near a downspout - damp earth = better ground.