He needs to be moved around, but ultimately he should spend the majority of his time near the line of scrimmage.
I'm a 3-4 Cover-3 fan, mainly because it's a symmetrical, versatile and easily adjustable.
Regardless, in any scheme his best fit is probably at the Sam OLB/Nickel spot. (or what Manny called Striker)
This is the strong side apex defender. There's a lot of different things you can do with that guy. He can play the flats, play man on TE's or slots, blitz off the edge, etc.
Offensive football is about utilizing space these days. Thus defensive football should be about TAKING AWAY SPACE. With his length and athleticism, his ability to take away grass (space) is a huge benefit for the defense. He can literally cover curl-to-flat at the same time, by himself. You can also forget about throwing bubble screens because he is going to manhandle the WR blocking him.
The whole reason defenses don't use Sam OLB's any more is because most offenses are spread, and LB's aren't athletic enough to play out there in space...so they sub in a Nickel. With subbing in a Nickel, you gain athleticism but you lose some physicality and size. You can exploit this by flexing a TE out, running bubble screens at the smaller Nickel back, running zone/read or option and forcing the Nickel to tackle the run, etc etc etc.
I've been saying for years, if you could ever find a guy big/physical enough to play LB, but athletic enough to play DB, he would be the prototype Nickel in today's defense. A guy whose long/athletic enough to play short/intermediate zones, physical enough to blow up bubbles, tough enough to play the run, large enough to cover TE's and aggressive enough to blitz the edge.
An athlete like James Williams is your fvckin' guy!
You make that his PRIMARY position.
From there you can put him in other spots via sub packages. He can run spot duty at Will LB or even Free Safety, rolling down in the box, blitzing, etc. He can be a Linebacker on Dime packages where he'll play man on RB's, spy the QB, blitz, etc.
Keep in mind, his ability to grasp all these different assignments will also determine how he's used.
He's definitely not a Safety in a 2-high scheme, not at this level of football. He'll get roasted. A single high structure provides a lot more flexibility for him.
Watch this kid's tape and how I used him in different spots, and you'll get an idea of what I mean. He was my Swiss army knife. A 6'1" 192lb LB/DB hybrid type. He does EVERYTHING on this tape. He sets the edge, he blitzes, he plays flats, he plays man, he plays high safety, he plays in the box, etc.
After watching that tape, picture a 6'5" 235lb 4.5/4.6 type of athlete doing those things.
I think James Williams can thrive in a role like that.