The best place to locate an air separator in a hydronic system is where the water temperature is high and the pressure is low. The solubility of the dissolved gases in the water is lowest at these conditions. For a heating system, the ideal location is at the outlet of the heat source. For chilled water systems, locate the separator in the return to the chiller. In wall-hung boiler installations, it is convenient to mount the air separator in the vertical hot water supply pipe, as shown in the figure below.
Of course, not all jobsite piping arrangements allow ideal installation of the air separator. Remember, an air separator is a multi-pass device and over time it will "scrub out" air and can bring the dissolved air content down to less than 0.5% of system volume. In that condition, the water will provide excellent heat transfer (air is an insulator, not a good conductor), and virtually eliminate noise (air makes noise in a hydronic system). Also, and maybe most important, removing air reduces corrosion. Corrosion destroys moving parts such as valve packings and pump seals and will foul heat exchangers, all bad news.
An air separator is cheap insurance against premature system failures and unhappy customers; read more about air separation (and dirt separation) in Caleffi idronics issue #15. Also, check out the whole family of Caleffi 551 Series DISCAL air separators and 546 Series DISCALDIRT air/dirt separators. Contact us with any questions you have; we are glad to help you succeed!