They had guided the village makes more sense than the proposed translation.
To lead = οδηγώ, κατευθύνω περισσότερο (αλλά όχι αποκλειστικά) με την κυριολεκτική έννοια. To show the way, to direct.
I think "to lead the village" is fine. I mean, you can have a "village leader," someone who leads, or guides, the village. (NAmE)
I agree; but "they had guided the village" is just as a correct translation and should be added as an acceptable answer, don't you think? For the time being it is not accepted.
Oh! I see. Yeah, I agree that it should be accepted. (I thought you were saying that "led" was wrong, not that "guided" was right.)
Personally, I'd use lead to translate "οδηγώ" and guide in the case of "καθοδηγώ", as in: