What's the difference between "(something) is on you" and "(something) is found on you"?
There isn't much difference. נמצאת (literally 'is found') is used here as a copula, to make the sentence clearer, instead of 'is' in English; but it's not really necessary.
Surely "The bee is on her should be accepted". It's also better English than "The bee is found on her"
Without nikkud, I agree that it's clearer to use עלייך for alayikh and עליך for alekha (and these are indeed the rules of the Hebrew Academy, http://hebrew-academy.org.il/2012/01/31/%D7%A2%D7%9C%D7%99%D7%9A-%D7%95%D7%A2%D7%9C%D7%99%D7%99%D7%9A/)
alaykh' - עלייך - on [fem]-you, alekha - עליך - on [masc]-you. but that goes for writing without niqqud alone. with niqqud both words being written with a single י: alaykh - עָלַיִךְ, alekha - עָלֶיךָ.
I can't believe that I got marked wrong for עלייך, given this conversation. Duolingo, you know better.