I've noticed that the nacelle outlet of the Lockheed Tristar is situated below the engine itself. It is at the end of the fuselage. The nacelle outlet of the tail engine of the DC-10 on the other hand, is at the same height as the engine. Why did Lockheed choose to lower the nacelle outlet? Perhaps this picture will help show you guys what I mean.
As Federico points out, the engine is located directly in front of the exhaust portion. This is true for almost all engines with ducted arrangements. It's much easier to duct the cool, slow intake air to the engine than duct the hot, fast exhaust air away from it, for both temperature and drag reasons.
In this cutaway you can see the intake duct leading down to where the engine is:
Putting the exhaust nozzle lower allows more room for rudder above it. Putting the nozzle higher, like on the DC-10 series, means the rudder is pushed higher up the tail.
This arrangement keeps the rudder as close to the vertical center of gravity as possible, which reduces the stress on the tail and limits the rolling motion induced by the rudder. It also keeps the engine forces close to the vertical center of gravity. This configuration also allows the supports to tie in to the existing structure at the rear of the fuselage. Placing the engine further up the tail would add surface area (and therefore drag), and require additional structure to support the engine above the fuselage.
The answer of why would be it is how it was designed, probably as a differentiating feature. This is vaguely mentioned here:
... a small vertical fin [is] between the bottom of the middle engine intake and the top of the fuselage.
I have discovered some more information regarding the S-duct design in an L-1011 marketing book.
S-Duct Payload Benefits The S-duct center engine location benefits payload by its lower fuselage weights. It allows a longer constant fuselage section thereby adding seating space. The more effective rudder allows the engines to be located further outboard on the wings and provides an optimized center cabin door location. The exhaust efflux provides an effective fineness ratio increase and hence reduces drag.
Center Engine Position In the S-duct arrangement the engine is 10 ft. lower than a fin mounted engine. This permits easier access for maintenance or engine changes.