That's the blow by vent hose on a S60 Detroit. It should lead down to bottom of engine.. Engine oil some smoke will come out at bottom of the hose.
Yes, the one below the BIG coolant hose. that has bent rubber hose hooked to metal tube. I'm believe that what it is. It should go down side of engine and it blow oil and smoke out the bottom and onto the ground. When the engine get more miles it will blow more smoke and more oil will drip out of it.
The blow bye vent hose is so the crankcase does not build up pressure. The new emissions don't let this happen anymore.