Translation:You are drinking beer and we are drinking wine.
I think I'm starting to get this -- but someone can correct me if I'm wrong.
I think that when you are comparing what you do to what someone else does, you need to stress the pronoun, so you use 'wij'. So in this case, the sentence begins with 'jullie drinken wijn' and then moves to we (in English), so it needs to be 'wij'. You're doing this but we are doing...
But otherwise you use 'we' -- or if you are saying that we do one activity and we do something else, then the stress is on the different activities, not the pronouns. So you would have 'we drinken wijn en we eten brood'.
In Dutch, the first person plural is "Wĳ". This can be pronounced in full, but there's also an eroded version: Thus, it can also be pronounced or written as "we". This is similar to "you" and "ya" in English, though "we" in Dutch is more acceptable than "ya" in English.
The full word is always acceptable, of course, but as with all eroded words, "we" can only be used if not of importance. That still leaves a lot of instances that allow "we"; just remember that sometimes "we" is not acceptable.
If "wĳ" has a form of stress, it has to be used in full. That can be because of being the most important part of the sentence, in which case it would be written as "wíj", including acute accents. (I assume there's a lesson on stress in Dutch.) But it can also be in a comparison. "Dit jaar leren wij Nederlands maar zij leren Esperanto." (This year, we learn Dutch but they learn Esperanto.) Also, when part of a combination, you have to use the full form: "Onze ouders en wij spreken een dialect." (We and our parent speak a dialect.)
My understanding of the "wij"/"we" thing goes that wij is used basically to put emphasis on who's drinking (we), whereas "we" would move emphasis away from who's drinking onto another part of the sentence, like the action of drinking or what's been drunk (wine). Which of those two is indicated, I think, by some other form of emphasis, like volume or length.
English uses two present tenses: Present simple (He drinks beer.) and present continuous (He is drinking beer.) Other languages don't. Some languages can construct a tense similar to a present continuous, but those are not used like in English. Thus, unless you're trying to learn English, this distinctions is of no use to you: Your French or Norwegian will not improve from knowing when English uses present continuous. Eventually, you'll find out what marvellous things other languages can do with their verbs, but for now, stick with simple present.
Dutch uses "Jullie drinken bier" (You drink beer), which is the simple present. Dutch doesn't treat English present continuous in any way, as it just doesn't exist in Dutch. I would suggest you treat any present continuous as present simple instead. "We drink wine and you drink beer." Usually, this translation is accepted as well. In the rare occasion where it isn't, report that your answer should be accepted as well, and it'll be added.
The difference between "wĳ" and "we", is that "wĳ" is the full form of the word, while "we" is an eroded form. Compare with "you" and "yah", except that it's now for first person singular and in Dutch is more common to actually write the eroded form. Like with "yah", you can use it if the word "we" isn't important; if it is, you need the full form "wĳ".
So is the first one. The Dutch sentence uses the present simple, and there's no context, so there's no reason to use present continuous for the English version.
Personally, I'd advice against using the continuous in the English answers at all, unless there is some lesson that indicates something needs to be present continuous. You're trying to learn a language that doesn't have a present continuous, so make it a habit just to use simple present.