"How is your aunt in Osaka?"
Sometimes it also helps to look at the の particle in a way that provides more information on the noun(s) after it. In this case since we are wanting to ask not just about their aunt but the one(s) in Osaka, おおだかのおばさん , おばさん is the main noun and おおさか is adding more information to that noun.
Yes. Duolingo teaches an American version of Japanese. I.e. a language butchered to fit cultural norms of Americans and with grammar rendering that fits the Procrustean bed of English language grammar terms.
"How are you" or "how X is doing" is a very common culturally conditioned phrase in English. That's why お元気ですか appears in most Japanese textbooks written in English. However, though being a good translation, the cultural norms are different, and it's not in fact a common phrase in Japan. A native person impression would be: why the hell she/he is asking about my aunt? Was she sick recently? Why it is her/his business?
I think the question is impolite even with お. Americanized way of teaching Japanese somehow makes it an equivalent to "how are you doing". In reality you don't ask this question out of blue. It means that there was previous information that the aunt has health problems. If such personal information was shared, probably the aunt is close to the person asking too. In this case she/he should know the aunt's name and address her by name.
Goasts - に is not used only for motion. に can be used to convey location, a specific time/date, for the purpose of, by way of, that someone/something is on or on something or getting in or on something, giving and receiving - to make just a few. Just off the top of my head.