why is "she is pretty but poor" wrong?
Krásná (beautiful) is stronger than hezká or pěkná (pretty).
"pretty" is less beautiful than "beautiful". It would be "Je hezká" or "Je pěkná".
It says it's something bad to be poor
How about "Je krásná, ale mladá"? Is that a terrible sentence, too?
It just describes a common fairytale trope.