1) It is not located within the physical body. It does not exist within the same "timespace" as the physical body. There is merely a transparent link between the two. Awareness can shift from the location of the physical body to the location of the "soul". This shift of awareness is the seed for all prophesy, all religion, albeit grossly misinterpereted and manipulated into the deformed mutant that it is today.

2) The soul actually enters into the physical body shortly after the first heartbeat of the physical body (is that toward the end of the first Trimester?). It is already known long in advance whether a baby will survive, and how long that lifespan will be. Souls select their vessel and their "physical liniage" according to their needs (of experiences that progress the development of the soul).