|I would definitely prefer to see it further away if at all possible. This link shows a MicroATX Minitower case:|
and it has room for 2 external 5.25" drives, 2 external 3.5" drives, and 2 internal 3.5" drives. In this case, you would have your DVD-r drive at the top, just in front of the power supply, an empty 5.25" bay, room for a floppy drive and a front media panel on the 3.5" bays if you would like, and up to 2 hard drives below that on the internal 3.5" bays (well away from the heat).
Your case would HAVE to be MUCH smaller than this one if what you describe is the case. Look carefully to see if there is another location to mount your hard drive if possible (I actually like to put an empty bay between hard drives when possible to improve air flow).
I have seen some of the older 'compact' cases used a while back which were very small, but they had small 200watt power supplies, and they had the power supply separated from the other components with a metal barrier which created a separate air flow through the case for each section.
You have to be a little bit crazy to keep you from going insane.
If all else fails, read instructions.