When the observatory is added it should be at the mountain near KSC

[Saturn-K]

observatory's are usually located high up where the atmosphere is a bit thinner so i think it should be at the mountains near KSC when its added

[S4qFBxkFFg]

I second this - it's also equatorial (so good for observing in the ecliptic, where you would expect undiscovered planets).

I can't remember off-hand if there are any other higher altitude mountains near Kerbin's equator, so that might be worth considering too.

(Although if the difference isn't much, better that it's nearer KSC.)

Further on, it might make sense to have the player build observatories at Kerbin's poles, to get better views of the skies there (e.g. for extra-Kerbolar observations or highly inclined comets).

[007]

I would think on the mountain range to the west of ksc, or on top of the mountain on that island with the airport.