Most people would use the male form ילד if they don't know the child's gender; hence, if you use ילדה it's strongly assumed that you know it's a girl. But that doesn't mean ילד is gender-neutral. If I ask you הילד אוכל איתך but this is actually a girl, you'll feel that I made a mistake and probably correct me (כן, אבל זאת ילדה, רק שתדע).
The way to be gender-neutral is cumbersome, but in some contexts you'll see it: הילדה או הילד.
Hebrew doesn't differentiate between Present Simple and Present Continuous, so both translations are correct. Why they don't accept both, I have no idea. By the way, next time you can directly report something like that - course contributers won't see it if you just write something in the forum.