Is it actually incorrect to drop the "mi"? I learned past tense without, just "wnes i", "wnest ti" and so on.
Mi and Fe used as pre-verbal particles in positive statements are common only in some dialects nowadays. The mutation of gwnes i, etc to wnes i, etc even without a preceding mi/fe is quite common in speech, though.
Why can't I use 'Gwelodd e...' in this context?
You can use it, and it is one of the accepted answers in the database - Gwelodd e anifail.
I thought so. When I typed in 'gwelodd e anifail' it marked me wrong.
Duo should be ignoring capitalisation, but try it with Gwelodd... when it comes up again and see if that works.