How to set the MaxDistance for a BillboardGui?

I'm not entirely sure that this is the problem, but I believe it may be because I assume your BillboardGui is parented to something in Workspace.

Since I have not worked with this property before, I am also assuming that MaxDistance only works locally, so please do not think that this answer is definitely right.

To explain what I said above..

The reason I believe MaxDistance does not work is because it does not have access to a player - it is simply there, but with references to nothing. But when it is inside a player, it has a something to reference (a player, and therefore a character, and then a head), which it can use to compare distances and then toggle visibility based on that.

TL;DR; the BillboardGui needs access to a point for it to be able to compare distances and make use of the MaxDistance property. It does not have that access when it is somewhere global (like Workspace) that does not have any specific thing to reference.

The solution is to parent it to the player's PlayerGui;

1. So it can be seen by the player, and
2. So it has something to reference.

Assuming this is a normal script in Workspace/ServerScriptService with the BillboardGui inside it:

local Gui = script:WaitForChild("BillboardGui")

game.Players.PlayerAdded:connect(function(Player)
    Player.CharacterAdded:connect(function() -- PlayerGui resets on character spawn by default
        Gui:Clone().Parent = Player.PlayerGui
    end)
end)

Hope I helped!

~TDP