The residual pressure valve is inside the master , remove the brake line to the front brakes , usually rear line on the master & remove the brass insert inside where the line bolts up , you will find the rubber residual valve in there .
Yes you can have manual disc brakes , I often do them this way .
The proprtioning valve may be ok but often the rear brakes will lock up too early so you may need to replace the prop valve with an adjustable one from wilwood to balance the braking system front to rear .