The girls reads and the girl is reading. Both are used but now "reads" was wrong. This must be a bug.
No. What really differentiates the Swedish y-sound from the i-sound is that your lips should be shaped as if you would say 'ö'. Try with sounding out a long 'öööö' and while doing so raise the tongue so that the tip touches the teeth and the back touches the palate. Then you (hopefully) get the y-sound.
There's a new bug afoot in the messages that are shown after you enter an answer that is not accepted. For instance if you put "The girl reading a menu" you missed the word "is", but the message could now tell you "You missed the word null" (or something like that).
Some of those messages are written by contributors and some are automatically generated but they look the same to users.