What's the difference between "Ihr" and "Ihre"? Thank you in advance :)
Look at whether it's standing before a noun or by itself, and if possible at the case.
Write these tables down somewhere accessible, and check them whenever you need to until you have them memorised:
Uses of sie:
sie ist müde = "she is tired" (nominative 3rd-person feminine pronoun)
ich sehe sie = "I see her" (accusative 3rd-person feminine pronoun)
sie essen = "they are eating" (nominative 3rd-person plural pronoun)
ich kenne sie = "I know them" (accusative 3rd-person plural pronoun)
Uses of Sie:
Sie sind willkommen! = "you are welcome!" (nominative 2nd-person formal pronoun)
ich verstehe Sie nicht = "I don't understand you" (accusative 2nd-person formal pronoun)
Uses of ihr:
ihr habt Hunger = "you are hungry" (nominative 2nd-person plural pronoun)
ich gebe ihr einen Apfel = "I give her an apple" (dative 3rd-person feminine pronoun)
das ist ihr Hund = "that is her dog" (3rd-person feminine possessive determiner)
ihr Brot ist lecker = "their bread is delicious" (3rd-person plural possessive determiner)
Uses of Ihr:
Ihr Auto ist fertig = "your car is ready" (2nd-person formal possessive determiner)
In summary, throw away the idea that single words in English always have the same translation into German - it depends what the word is doing! The same applies in the other direction.
Sometimes you can't tell if sie means "them" or "her" (examples #2, #4) without more context. But you can tell when it means "she" or "they" because of how the verb changes (examples #1, #3).
You also can't tell when someone is speaking, or if the word is at the beginning of a sentence, if it's sie ("they") or Sie ("you"). You also need context for that.
Possibly the most confusing of all of these is ihr, because it's used as so many different things, but each of those functions is quite different so it's actually easier to tell it apart. If it's the subject of the sentence with a matching verb it's "you" (#7). If it's not in front of a noun but also not the subject then it's "her" (#8). That one's a little tricky because English uses "her" for both accusative and dative case, where German splits it into sie and ihr, so you need to understand dative case a bit. Then you also have ihr as a possessive determiner, which only exists in front of a noun (#9, #10). But then in that situation you also need more context to know if it means "her (thing)" or "their (thing)".
Keep practising! You'll get there!
(Oh, and Ihr is never "they")
'2nd position' does not always mean '2nd word'. The words Ihre Schuhe need to stay together, so they are considered to be together in the first position. The verb sind is then in second position.
Here is a good article to understand it: https://yourdailygerman.com/2013/01/03/german-sentence-structure/
Does anyone else fail to hear the word "sind" when Duo reads the sentence? I cannot hear "sind" at all. My ears hear "Ihre Schuhe schmutzig". When you loose the "verb" in German...the whole sentence falls apart! By deduction, I know Ihre Schuhe suggests plural...Your shoes dirty...and my mind says Okay, Your shoes ARE dirty. But not my ears! They just hear Your shoe dirty.