Were both plugs out when you did the test?
If the valve is PB adaptable, and it looks like a PB adapter is installed, with a plastic plug in it .
the air will blow out the PB port and not the return port.
If the PB adapter is installed, the fluid will only exit the OUT port when you move the levers, and the cyl fluid can exit.
If you want to use that valve as a closed center valve, then plug the PB port with a steel plug. or install a closed center adapter.
The valve appears to be set up for open center.
The closed center plug will be a shallow flat hex plug.