How far is too far? Coil location

I’m not sure the distance away is as important as grounding. If you move the coil off the engine, the return path for the spark will need to go through the body back to the coil. Make sure you have a ground strap from the engine to the body.
The coil does not have to be grounded except for the negative wire to ignition source. I have seen coils mounted on plywood and plastic.