you can put it anywhere you want- it does not matter. you will only see evaporation in the sump though. what henry meant was that when salt water evaporates, only the water leaves the tank....the salt stays. for replacing THAT water, you only need to add fresh.
if your display tank water level is a bit low, you will need to raise the level of the surface skimmer box which is part of the overflow. that is the only thing that will raise the water level in the display.
as for the water all over the floor, this could be from a few things:
1. the return lines that come from the return pump and end inside the tank under water will back siphon if you turn the pump off. it will drain the tank until the siphon breaks. you will need to drill a hole in this return line just under the water inside the DT so that when the power goes off, the hole will suck air almost immediately and the siphon will break.
2. you have been adding water to try to raise the dt water level and all you are doing is overflowing the sump. all water fluctuation will be seen here. you'll never see any difference in the DT. it will always remain full (filled to the top of the overflow box).