A literal translation does not work well here. It is best to translate the sentence as a whole into something that sounds OK in English. However it is sometimes hard to understand Portuguese idioms, and Duolingo generally prefers rather literal translations, so you can´t always get it right.
Can it also have the meaning of 'he continues here' as in someone giving directions?
It could mean that, yes, but if that was the case, I'd imagine myself pointing at a map, at a certain street or whatever and saying "Então, ele continua por aqui..." .
Now, if there is no map, I would opt for... "Ele segue". The verb seguir has this more of "location" sense.
"Ele segue até o fim da rua", "Ela deverá seguir/continuar até o fim da avenida"
Is it any more unnatural in Portuguese to say "Ele ainda está aqui," or are they roughly interchangeable?