"Nobody lives in this city" was marked wrong, why? Grammatically and semantically it is equivalent isn't it?
Not quite so. The actual translation is "People don't live in this city." Semantically equivalent doesn't mean technically correct. And just like there are subtle differences in English expression, the same is true of Russian, and indeed every language.
Me, after getting one wrong: OH COME ON YOU STUPID OWL YOU'LL TAKE "IT IS FORBIDDEN" BUT NOT "YOU CAN'T" F THIS I'M DONE
People are not living in this city - Is wrong. Is this because живут means something different or is my answer just bad english?
Your answer is definitely not bad English. Although "People are not living in this city" is technically grammatically correct, it's just not a common sentence. Usually you'd just say "People do not live in this city" ... yet, even that is kind of a weird sentence. You'd think a "city" would require people to be there, in order to be a city.
As for the Russian part of your question, I have no clue. But I wouldn't think it would be any different.
After много you need the genitive case. (Because it means "a lot of") Same with мало by the way, which means "few"
I put "There are no people that live in this city" and it was marked wrong.
If nobody lives there, then how can it be a city?
Don't you need people for it to be a city?