A capital should be in a transportation nexus, with trains, a major airport, good local transit, etc. Access shouldn't be mostly just cars.
I'd put it in the biggest city.
Olympia isn't a great location by that standard, but it's not terrible. You
can get there by Amtrak and local bus, or by taking a train/bus to Tacoma then transferring to local bus. But it's time-consuming. And it's worse if you're not in the I-5 corridor.