Acting while singing is a must. Your acting preparation of your song needs to be as detailed as your musical preparation of the audition. You want your audience to watch you during your audition, and if you aren’t acting, they have no reason to look at you.
At an audition, your choice of where to direct your eyes is similar to where you direct your eyes if you’re telling a story. The only decision you have to make is whether to look at the person you’re singing to. Most of the time, the answer to that question is to not make eye contact. However, if you have a fun song that has spunk and character, do look at your audience.
Songs that address your invisible scene partner are best directed to that imaginary partner on the wall directly in front of you. Because you’re pretending that you’re talking to that scene partner, you want to look at him as if he’s in the room with you, but not stare at him.
When you have a conversation with someone, you look at that person and then look away, but you don’t stare at him. You don’t want to stare at the wall when you sing your song at your audition.
Assuming that the casting director for whom you’re auditioning is sitting near the middle of one wall in the audition room, focus your eyes a few feet on either side of him (or them, if there’s more than one person).
Most acting teachers tell you to keep your eyes centered in one spot on the wall so that you don’t have any odd body angles in an audition. That’s good advice in the beginning of your training. As you get more accustomed to different kinds of focus and multitasking, you can widen your focus.