Mine is positioned like yours. I remember trying it both ways, but it didn't seem to fit right the other way. But the bottom of my K member is collapsed a little bit in that gap - probably a Dukes of Hazard stunt?
When the wheels are on the ground, if the drop link ends are below the sway bar mounts on the k member, it should curve up. If the drop link ends are above the sway bar mounts, curve down. The goal is to keep the sway bar end mounting points parallel to the ground and perpendicular to the drop links.