What is this, and where dose it go? (Wiring W/ Pics)

It is the ground wire for the eec computer.

Some might say to run a wire from the battery to that location but I have just used a ground wire from it to the block that I added when I did mine.
I used a 1/0 gauge wire from the block to the inner fender. I have never had a problem in over 5 years like this.

Oh, and I also replaced the ground strap on the back of the cylinder head for a new one and made sure it had a good connection as well.

Then I just grounded my battery to the back of the car.

^^^ I did the same. works fine

Like this.
View attachment 497415

Then I cleaned up the wires and ran them in the fender and connected it from the backside like this.

Rear mounted battery ground wiring. Follow this plan and you will have zero ground problems.

One 1 gauge or 1/0 gauge wire from battery negative post to a clean shiny spot on the chassis near the battery. Use a 5/16” bolt and bolt it down to make the rear ground. Use a 1 gauge or 1/0 gauge wire from the rear ground bolt to a clean shiny spot on the block.

One 4 gauge wire from the block where you connected the battery ground wire to the chassis ground where the battery was mounted up front. Use a 5/16” bolt and bolt down the 4 gauge engine to chassis ground, make sure that it the metal around the bolt is clean & shiny. This is the alternator power ground.

Crimp or even better, solder the lugs on the all the wire. The local auto stereo shop will have them if the auto parts store doesn't. Use some heat shrink tubing to cover the lugs and make things look nice.

The computer has a dedicated power ground wire with a cylindrical quick connect (about 2 ½”long by 1” diameter. It comes out of the wiring harness near the ignition coil & starter solenoid (or relay). Be sure to bolt it to the chassis ground in the same place as you bolted the alternator power ground. This is an absolute don’t overlook it item for EFI cars