The further back the gauge wheels the fewer dips you will have. It will do a better job grading level. However you need to be practical. My neighbor has a Woods rake that I have used a few times and as stated above the wheels are too close to the tines and won't swivel all the way around. Even when moving forward the rake does not grade as well as my rake with the wheels set further back. I think the 6-8" between the back of the tine and the front of the wheel that Junkman mentioned sounds good.
Remember, there is a reason that road graders are so long.
Good Luck