It is located in the interior of the bone. Particularly in the Proximal and Distal epiphyisis
The spongy bone is filled with red bone marrow, and yellow marrow
If by the spongy bone you mean bone marrow, it makes blood cells. There are three types of blood cells; red blood cells, white blood cells, and platelets.
Yes. Spongy Bone is dense and does contain bone marrow.
Compact Bone is the tough outer layer of bone while spongy bone is the porous bone where the red and yellow marrow is.