I'm not sure where the filter goes in this furnace. I opened the lower compartment and there's two possible places I can think of. From the bottom up, there are side supports that would keep it in place, but a few inches up, there's another set of supports that would also keep a filter in place. Any ideas? Thanks.

If you are not using filter grills you want to filter at the first place you can on the air intake side of the furnace.

If it is a belt driven furnace it probably takes 2 filters one in each rack

Thanks. Yes, it is a belt driven furnace, Janitrol DuraTube 1954. It does have what it looks like two racks for 20x20x1 filters. While the furnace was running, I didn't feel any air blowing up from the botton rack (from the floor to top). The 2nd rack from the botton had a lot of air flowing up. When I placed the filter in this rack, it felt a bit too light, the air was lifting it up a bit. It didn't seem right, but I could be wrong, I'm clueless on this and didn't ask our technician 2 years ago when we had a tune-up.

Here's the photo, with a single filter placed on the bottom rack.
IMG_0997 on Flickr - Photo Sharing!

From this picture I see no return duct is it in the floor? Or does it hook it the back of the furnace?

I've added more pictures. The original picture is the bottom of the furnace from the floor. I'm not sure what a return duct is. . Let me know if these pictures help. http://www.flickr.com/photos/44639885@N02/

I give up. We need to see, hopefully, two distinct ducts attached to the furnace. Is the duct we see, warm when the furnace is in operation? i.e. supply air?

PS: You can post pics directly using "Go advanced/manage attachments" . I fixed the link above so it works.