Maybe the sponge was put there to try and trace a leak and they forgot about it? Who knows, it does sound bad at first but there could be many genuine explanations for it. I cant see a specialist trader sticking that in there to try and hide the problem surely? As i said maybe to try and find the leak yes but not to try and hide it from buyers. Especially a trader from on here as its bound to get back on here anyway, so i cant see them risking their reputation for the same of an oil leak that 95% of them have anyway.
As said, the trader doesnt HAVE to check every inch of the car, but you would expect them to see that in fairness.