"That man who lives beside the new hotel is walking there on the street."
Translation:Az a férfi sétál ott az utcán, aki az új szálloda mellett lakik.
Because it goes against the logic of this sentence. Basically, whatever is before the verb in the first clause gets referred to by the second clause. That man who lives beside the hotel. The "ott az utcán" (there on the street) part is not a part of this structure, it cannot be mixed in, it needs to be outside the main structure. You can see it clearly in the English sentence how much that non-identifying information is put to the side. Similar logic in Hungarian.
Why is "Az a férfi, aki az új szálloda mellett él, ott az utcán sétál" wrong? The translations don't seem to include the word "él" instead of "lakik".
My understanding of "él" is that it refers to "living" in the sense of being alive vs "lakik" which is about where you reside / make your home.
This is of course the correct translation, but that's not the one that the system gives as correct. They give the following: Az a férfi lakik az új szálloda mellett, aki ott az utcán sétál. In English that would be: It is that man who is walking there on the street (and not some other man) who lives beside the new hotel.