Is there any way to tell when chodzi means walks vs goes? Or does it matter?
"Goes" should imply some direction, so it rather cannot be a correct answer in such a short, vague sentence. But "on chodzi do szkoły" could be translated both as "he goes to school" and "he walks to school".
Shouldn't "He is going" be accepted? Or I'm kinda lost here. CAPTAIN!
To quickly answer:
chodzić = the Simple versions (to go, to walk)
iść = the Continous versions (to be going, to be walking)
To be walking without a purpose and direction can also be "chodzić".
To Marek: Is iść imperfective and chodzić perfective?
They are both imperfective, they don't say anything about 'reaching the place'. They differ in aspect: habitual vs progressive (Simple vs Continous).
O co mu chodzi?
For others: that's a common construction which means something like "What does he mean?", "What does he have in mind?", "What is he talking about?" and so on.