The o2 sensor is the 'black block' above the air filter - it will have a wire coming off the side of it for the sensor.
To quickly test if it is the MAF sensor (other name for o2 sensor) unplug the sensor wire and see if the problems clear themselves.
The car is completely safe to drive without the sensor - it just means the ECU reverts to a pre-programmed fuel mix. You will be able to drive no problems at all without the sensor plugged in, perhaps seeing just a slight decrease in economy and sometimes a lumpy idle.
If it is the MAF, only buy a genuine BOSCH replacement - cheapie aftermarket items are a complete false economy. Luckily they are simple to diagnose and easy to replace.
-1998 916 Spider 2.0TS Lusso-
H&S Corse stage 1.
CATCAMs stage 1 cams with Savali custom ECU remap.
305mm discs with 166 4-pot callipers.
Ragazzon exhaust mid section.
Biscione Racing 2x70mm rear section.
17" Zender Siena wheels with 3mm rear spacers.
etc etc etc!