I always take the parachute and the approximate length of shock cord that I will be installing and pack it into the top of the airframe just like I was prepping the rocket for launch, and then insert the nose cone. Then I measure how much length this takes up. I position my baffles no more than 1/2 inch below that point. (1 inch in longer airframes.) Use a long dowel or a long thin ruler inserted up through the motor mount to determine where the bottom of the recovery package is after you have packed it like this and placed the nose cone on. (Remember that the shoulder of the nose cone requires some space, too.) That will give you an indication of how far into the top of the airframe you should recess the baffle when you install it.
I always coat all surfaces of my baffles with a smooth layer of epoxy when I assemble them (laminating or finish-cure epoxy works great for this) and then smear the inner wall of the airframe where the baffle will be with more epoxy when I install it. The baffle will be doing its job when it traps all of the burning particles of BP from the ejection charge and retains them within it. This means that there will be stuff inside the baffle that will burn for a little while after recovery system deployment. When you retrieve your rocket after it lands, don't be surprised when you put your hand on the part of the airframe where the baffle is located and it feels HOT! It will stay that way for awhile, too. The coating of epoxy on the baffle will help it to last a little bit longer, and the epoxy on the inner wall will slow down, or even prevent, burn-through of the airframe.
MarkII