In idiomatic English, at least in Australia, 'I don't sleep' is often interchangeable with 'I can't sleep' I think it should be accepted. (This is similar in a way to how Americans will tend to say 'I don't see the car' while Aussies are more likely to say 'I can't see the car' - they mean much the same thing.)
It depends on what come after בגלל. If it's a noun, then you don't put the ש. If it's a clause, then you use ש.
Let's take this sentence and expand it:
אני לא ישן בגלל הילדים - I don't sleep because of the children.
אני לא ישן בגלל שהילדים בוכים
I don't sleep because the children are crying.
In the second instance, בגלל ש can be replaced with כי (אני לא ישן כי הילדים בוכים), while in the first sentence it can't.