Nissan Patrol 4x4 (Africa)

According to my knowledge (from what I have read) the pcv valve is situated in the hose coming off the top of the tappet cover closest to the firewall. Not the hose going to the air filter housing. But where exactly is the valve?
I pulled the hose off but cannot find it.
Or is it further down, here? Blue or red?

The "fitting" inside your blue circle is the PCV valve.

Then on a side note.... the hose going to the air filter housing... there is a sponge acting as a filter which got lot if gunk on it. What is the purpose of this? And what is this for? (Pipe going into air filter housing with some sort of adjustment screw inside air filter housing)

Re the sponge: that pipe is the engine's breather. When the engine cools down, air is drawn back into the engine through that hose. The sponge is effectively a little air filter to stop dust from being drawn back into the engine. Remove it and clean it by soaking in petrol at every service.

With regard to the valve under the filter, the manual explains it better than I can. It is a bi-metallic valve (in other words it is temperature-operated) and if I remember correctly it supplies or cuts supply to the altitude compensator assembly.