"My older sister is good at playing piano."
The exercise is here to train you to use verb+の so of course you need to translate it litteraly.
That would be a fine argument, were it not for the other question where you had to translate "僕はピアノが下手です" into "I am bad at the piano", and "..playing the piano" was counted as incorrect. It's just Duolingo being inconsistent again.
That sounds consistent to me. のが is like introducing an English gerund. While "bad at the piano" and "bad at playing the piano" are semantically similar, they are still different phases. There are places where Duolingo is inconsistent, but I understand why they've done what they've done here.