your bike is essentially a reduced displacement xt600, so download the workshop manual for the 600, it will serve 99% of your needs.
top of the valve cover is actually a common place for for breathers on many bikes, and of course, should be connected to a tube, otherwise it will shoot oil vapor all over.
some markets had different emissions solutions for engine breathers, so what was done on the 600 might not apply to the 500
with all the red silicon i see on the tappet covers i can assure that previous owner was NOT a genius mechanic, so might have left important stuff disconnected, or even throw away a T joint for that tube
if you dont find in the manual a specification to where the tube should go, try to mc giver some solution so it does go into the airbox. it just needs to vent there the oil vapors, its not holding pressure, so not rocket science to solve.
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