Looking down on your tank from the top, it goes in the back right chamber..
Yes, remove both of the blue sponges..
I'd add some chemi-pure or purigen in the back chambers, or even both..
I made 2 removable filters using 2 pieces of egg-crate and filter pads cut to size in between them, zip-tied together.. I put one in between the skimmer and the overflow, and the other up against the center divider in the back.. just to the right.. I change them weekly.. just to catch debris and help stop with bubbles (which for some reason my sapphire puts out a lot of bubbles into my tank)
But anyways.. Good luck with your AP..