Translation:I saw an interesting movie with my little brother last week.
It's because you used the wrong verb tense. "Have watched" is present perfect tense implies that an action started in the past and continues in the present. For example, "I have watched this movie for two hours." I started watching the movie in the past and it's implied that I'm still watching now.
The sentence in the lesson here requires the simpler past tense because the action occurred entirely in the past. That would be "watched" in English.
Actually it may have been something else as well. Say19934 may be right in one way. I typed: "I watched a movie with my younger brother last week" and it was marked incorrect. Apparently , there is a big difference between "younger" brother and "little" brother. Which is illogical in the English translation since they have the same meaning.
I feel like the placement of おとうとと sounds odd, but idk if it is wrong?? it just sounds strange to me, like you are saying what you saw last week and u saw your brother and a movie, lol. If I were having this conversation I would have said おとうとと一緒にえいがを見ました (using いっしょに). I don't remember if we learned 一緒に yet but that sounds much more normal to me? But maybe both are ok and I am just used to hearing 一緒?