"I am now in the city."
Translation:Я сейчас в городе.
The odd thing is that was accepted for in an earlier lesson so naturally, I figured I could do it again. Apparently not.
Welcome to the world of Russian declension. :) "Город" means "city" in Nom.sing. or Acc.sing., while "городом" is Inst.sing. You can see the full declension table here: https://en.wiktionary.org/wiki/город#Russian In this case you have to use Prep.sing. городе since the preposition в almost always requires it in this case. It can also be used with Acc., but for some other reasons; you will learn about them later.