No this doesn't vent any fuel, just exposes the fuel pressure regulator to atmosphere without letting dirt or water in. You can disconnect it from the boot if you want but let the hose hang down and don't plug it, plug the fitting in the boot though. Leaving it hooked onto the boot might give you slightly less a chance of setting off a CEL with a plugged air filter but leaving it off eliminates the risk of sucking a large amount of fuel into the engine if the regulator diaphragm ruptures which is pretty rare but does happen. You should make sure the short portion at the regulator is OK as that is very likely in poor shape.

This is all M54 knowledge but it sounds like the V-8s have the same thing just looks a little different where it goes into the boot. The other end of the line goes onto a metal tube which runs down under the car to the fuel filter if you want to make sure.

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1988 325is (purchased new) sold
2004 X5 3.0 2005 X3 2.5
2008 X5 3.0 (new to me)