Location is specified with the combination of a location noun and/or relative place word (上、下、中、外、後ろ、前、横、そば）and the location marker に､and one of the two existance verbs ある or いる
ある is used when talking about inanimate objects or states of being. while いる is used for animate objects.
My dog is in your car わたしの犬はあなたの車にいます｡ My hat is in your car わたしのぼうしはあなたの車にあります｡
If you want to specify a relative location IE in something, next to something, on something. you combine the location noun with the relative location word using the posessive particle の
On the desk つくえの上 In the bag かばんの中 by the tv テレビの横 behind the car 車の後ろ infront of the computer パャRンの前
becareful to include the location particle に at the end of the relative location statement. で can also be used for location, but not in combination with the いる and ある verbs.
の中に is to indicate object location, for example スパートの中に本屋があります。(Bookshop is in the supermarket.) の中で is exlpain as "among the category", for example 果物の中で、どちらが一番すきですか。(Among the fruits,what is your favourite?)
ex #5902 の中に should be changed to 中で(なかで）. Also "out of" should be "among".
I hope you don`t mind but I added some grammar to your grammar note. As for に and で they are used in much the same way, but they are not interchangable. に is used for static states of being, while で is used for dynamic states or action. if your verb is いる､ある use に if its anything else で would be a good bet.
Is this a grammar entry? ex#5902 J is strange. I guess you ment スポーツでは、どれが／何が 一番好き（ですか）？ What sport do you like best?
As what i get from the book it should be "スポーツの中で、どちらが一番好きですか" . As what Cleber's example, it should be "果物の中で、どちらが一番好きですか" in English "Among the fruits what(which one) is your favourite". Please correct me if i am wrong どうぞ宜しくお願いします.
I think the example ex#5902 is right. I read already a sentence like this: kudamono no nakani, dochiraga ichibansukidesuka.
According to my Japanese friend they never use "の中に" when you are picking items out of a list (like picking your favorite). They say, "スポーツの中で、どちらが一番好き？ I think that "の中に" translates more to "within" and "の中で”is "in or out of". So the sentence 箱の中に、なにがあるの？ is correct because it can be translated as "What is there within the box?"