The only hint for "etre mauvais" is "failed", although there are other hints for "mauvais". This makes me believed that the lesson would be to teach a special usage of "etre mauvais". Therefore, I made my input with "he knows that he is ailed". As all users who have practiced this exercise can expect, I was rejected.
If there were no hints at all, I would have understood the sentence as " he knows how to be bad" --which is the same as the answer by the system. Since the hint suggests something else, I thought I was wrong and choosed hinted answer.
I am writing here to complain the hints like this one. These hints do nothing to help the users but only mislead.