Why can't rất đẹp be used?
Thật means true, truly, so you're correct, rất would fit better.
That is best translated into English as "really".
Rat as "very"
It should be rất. I think there is a mistake on the module.
I think it's a trick question designed to throw you off.
I was marked correct for using rất
Because the sentence have an ARE
Why is là not acceptible here?
đẹp is an adjective
"Là" is used to say that a noun is another noun, but in the sentence, it's describing a noun ("bạn") with an adjective ("đẹp"), so you can't use "là".