Translation:A Frenchman is standing at the corner and smoking.
Well, you cannot use "French" as a synonym for "Frenchman"; that is no longer acceptable in English. "French person" would hopefully be accepted here.
As for the "and", I think the issue is that there are clearly two verbs in the Russian sentence: "стоит" and "курит". Your sentence has only one. "There is a French person standing on the corner smoking" would be the most natural translation to me, and hopefully that would be accepted by Duolingo. (I'm not sure if it is because I only had the word choice question type here.)
The answer is grammatically incorrect. "There's a Frenchman smoking at the corner" should be accepted. The Russian seems very odd. But since you can change word order in Russian without changing the meaning, it would seem more logical to say, "На углу француз стоит и курит". Although that:s likely strange to a Russian. What about, "На углу курит Француз" or "Француз корит на углу" ?
I have noticed that with стоит Russian likes to use и when telling what the person is doing while he/she stands. But in English it is perfectly correct to say "A Frenchman is standing at the corner smoking." The word "and" is superfluous. This is one of those cases where a literal, word for word translation is not necessarily best.