Question

I would like to create simple drop down with options and one of the will be PASS then show DIV once selected option PASS from drop down menu, for other options DIV will be closed

<script type="text/javascript">
document.getElementById('mfi_4_a_i').onchange = function(){
    if (this.value == 'PASS') {
        document.getElementById('sdd').style.display = "block";
    } else {
        document.getELementById('sdd').style.display = "none";
    }
};
</script>
<select id="test" name="test" onChange="changetextbox();">
    <option value="PASS">PASS</option>
    <option>No</option>
    <option>No, but planning in future</option>
</select>

<input type="text" name="test" id="sdd" />

Answer 1

Change the order

<select id="test" name="test" onChange="changetextbox();">
    <option value="PASS">PASS</option>
    <option>No</option>
    <option>No, but planning in future</option>
</select>

<input type="text" name="test" id="sdd" />

<script type="text/javascript">
document.getElementById('mfi_4_a_i').onchange = function(){
    if (this.value == 'PASS') {
        document.getElementById('sdd').style.display = "block";
    } else {
        document.getELementById('sdd').style.display = "none";
    }
};
</script>

You need to ensure that when the JavaScript runs the DOM elements are ready ….

Note your id attributes do not match either ..mfi_4_a_i in JavaScript vs test in HTML and you should either write a function changetextbox or write getElementById('blah').onchange = function() { not both …

<select id="test" name="test">
    <option value="PASS">PASS</option>
    <option>No</option>
    <option>No, but planning in future</option>
</select>

<input type="text" name="test" id="sdd" />

<script type="text/javascript">
document.getElementById('test').onchange = function(){
    if (this.value == 'PASS') {
        document.getElementById('sdd').style.display = "block";
    } else {
        document.getElementById('sdd').style.display = "none";
    }
};
</script>

Working example here

Another Note you had

document.getELementById('sdd').style.display = "none";

this should be

document.getElementById('sdd').style.display = "none";

I changed the case of the L in Element