"It's finally working again" is wrong, but "It finally's working again" is right?? i have never seen finally's abbreviated like that.
Finally it functions again , is the same I think as : finally it works again
"finally, it is functioning again" should also be accepted.
Why would this be wrong??
It sounds a little stilted but it should be correct. If you think your answer is correct just submit it to Duolingo – they quite often amend answers.