Kill coils are best placed in the reservoir, generally they are curled so that they are larger then the exit of the res so they cannot be sucked into the loop.
Just drop them in (seriously thats it, if you want get some fine sandpaper and give it a quick rub and wash with the coolant to make sure there are no oxides on the silver)
Silver inhibits bacteria growth, so essentially kills any bacteria that get into the loop before they can multiply and gunk up the loop