There in this context is about a presence rather than a location. The difference is similar to saying there is the sponge and there is air in the sky.
I am not sure what you mean by mixing, but the English sentence is correct as written. However, you would not say 'Why is here a sponge there?'.
I think you would be fine. Same goes for danish der/her. The alternatives are "Why is here a sponge" and "hvorfor er her en svamp". Good question though. The "der" and "there" seem wasted.
You would never say "Why is here a sponge?" in English, although "Why is a sponge here?" is fine. It's strange!
Jeg leder efter mine bukser - du ved; de firkantede.
I wonder why he's SvampBob in Swedish but SvampeBob (with an extra -e-) in Danish and Norwegian.