Whereabouts in Egypt did they place Yosef's coffin?
Why did they place Yosef in a coffin?
Moshav Zekenim #1: [Bnei Yisrael did so,] so it would be easy for them to take him when they were redeemed from Egypt.
R. Bechayei, from Midrash Tanchuma (Beshalach 2): [The Mitzriyim] put him in a metal coffin and lowered it into the Nile, so Bnei Yisrael would never find him. 1
Moshav Zekenim #2: It was the practice to bury only kings in a coffin.
Moshe wrote "Alei Shor" on a piece of metal and cast it into the river, and the coffin rose.
Why did they embalm Yosef?
Moshav Zekenim: It is because he embalmed his father. One who eulogizes, he will be eulogized... (Kesuvos 72a) 1
This implies that Yosef did properly. Rebbi (in Bereishis Rabah 100:3) says that Yosef was punished for this! Rabanan (there) say that Yakov commanded his sons to do so. Ramban (48:7) connotes that Yakov would have embalmed Rachel had he been able to. Teshuvas ha'Rashba (369, brought in Darchei Moshe YD 363) says that there is no pain or disgrace through embalming. The Radvaz (1:484) concludes that we should not try to alter the nature that Hashem established. Surely we cannot learn to embalming done nowadays, for perhaps it is different! (PF)
היכן נקבר יוסף?
מהר"ל (חידושי אגדות ח"ב עמ' נג ד"ה כדי, סוטה דף יג.): לדעה אחת לא קברו אותו עם רשעים אלא שמו אותו בנילוס כדי שיתברכו מימיו- כי יוסף הוא המשביר לכל הארץ וממנו מתפרנסים, ולדעה שניה גנאי הוא אם לא נקבר, אלא נקבר בקברניט של מלכים [-קבר מלכים], ולא היה ידוע היכן.