That is not a very good setup and YES you close the PCV where the arrow is pointing. Just get a rubber cap to put over the end of the valve.
On the catch can, one hose is the inlet and the other is the outlet. You have both being the inlet and a breather on one of those....I don't understand the thought process behind that and it definitely won't work as well as it would if it was setup properly.
You need to have the two lines from the valve covers tee into ONE line that goes to ONE side of the catch can. The other side of the catch can has the breather on it. Other than that it looks good. What sized lines are you using from your valve covers??