Yes it matters but I can not tell you more then that since I have never messed with one on the N series tractors
 
The closer to the engine the better, but the direction would
be more important to me. It will overheat if in backwards.
 
The copper or brass colored "bulb" that holds the "wax pellet" that powers the thermostat needs to face, and be close to the cylinder head.
 

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