That would be how you would use it formal language, yes, as in English.
But in informal language, especially in certain regions, the article is used with people's names even without such an implication.
I should probably not have mentioned it, but having said it, it's probably best to prepare to recognise that usage from native speakers ("Ich bin der Hans. Kennst du die Hannah? Weißt du, ob der Paul mitkommt? Ich muss das noch der Steffi sagen.") but not use it yourself until you're fluent enough to pick it up naturally and recognise when it's appropriate to use it. It is pretty informal, at least in my experience.
It would be best to pronounce it the way you pronounce it. Although, some people, such as me, get obsessed with the language they are learning. My name is really spelled 'Nolah Leick' but I have gotten so obsessed with German I now spell it 'Nölah Leich'. It is really a matter of whatever you feel comfortable with.
Is it ok to change the ch in Ich to a sh sound when in a sentence?
No. Kirche "church" and Kirsche "cherry" are two completely different words, for example.
Some people in Germany do speak like that (turning the Ich-Laut into a "sh" sound), but it's a regional accent and is not standard pronunciation.
I wrote "I'm Hans" but it corrected as "I am Hans"
Do you have a screenshot showing that? "I'm Hans" should be accepted.
so shouldn't mark as wrong
I agree. Please show a screenshot marking it as wrong so that we can see what might have happened.
To share your screenshot with us, please upload it to a website somewhere (e.g. imgur) and tell us the URL of the image.