"Please sit down there."
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そこで doesn't work here because the sentence is sit down there, that is a direction where to. ("To there", if we ignore English grammar.) That's why we use そこに.
With そこで this sentence would be "Please sit there", which only shows the place and not direction, which is implied in the English sentence by using "sit down".
I feel like it should only be "please sit there." To avoid confusion because you don't say "down there" in Japanese even though it can mean approximately the same thing in English to say "down there" unless I'm wrong but they definately don't say "sit down there" in this sentence; it's just "sit there". Like it should accept "down there" but the English sentence should be shown as "please sit there" because that's a better translation