"Please do not wait in line in the hallway."
Hi. This is a very good question and is somehow hard to explain too. Lets try. 「に」is usually known as the target particle, used to express the target of the verb; and also to express locations, and final destinations. 「で」is also used to express locations but also means, so it can be known as a contextual particle. It may help to think of 「で」 as meaning "by way of". So to answer your question, in this example 「に」is used instead of 「で」because we don't stay "by the way" of the hallway. Please don't stay "in" the hallway. I hope this helps.
廊下 is accepted now.
If you use the tiles instead of typing the answer yourself, 下 is a kanji that has already been learned, while 廊 has not been taught yet, so the default answer was ろう下 with no variation. After people have submitted all the possible variations as error reports and someone approves the suggested answers they get added to the database.