Translation:Is school fun?
When we (Japanese people) ask がっこうは楽しいですか? to you, yes it means 'Are you having fun at school/enjoying school?
If you want to ask 'Is school fun (place)?' then the question needs to be 'がっこうはたのしいところ(place)ですか?' (although you don't ask such a question even in English, I am sure (^^;) )
This is because たのしい、しあわせ (happy)、かなしい (sad) etc express feelings, as same as English.
When someone asks me 'Is school fun?', I automatically think the person is asking if I am enjoying school. i.e. if you ask your friend たのしい?, that question asks Are you having fun ?'
So again your translarion is correct.
In what way? Your meaning is unclear. Do you mean that Duo is fixating on a particular point of English grammar and choosing only to accept that as a correct answer? I think both Andreapert12's answer and Duo's answer should both be considered correct - it is just a matter of people reporting errors or other possible correct answers and Duo building their list of acceptable answers accordingly.
They actually mean two completely different things - omoshiroi - interesting or funny/amusing in a ha ha laugh at a joke sort of way. tanoshii means fun or something that is enjoyable ie. something you like doing. There is also okashii which means funny - as in laughing so hard you have tears streaming down your face funny (that is the point of difference with omoshiroi - omoshiroi is something that might make you smile and/or chuckle) AND it also means funny as in strange/odd and can be used to describe something tasting strange, amongst other things.