"She lives in Taiwan."
The verb 在 (zài) is used to express existence in a place. English does not have a verb exclusively for this purpose and instead uses "to be" with a preposition. In Chinese, 在 (zài) can cover both of these roles.
Subj. + 在 + Place
Remember that you don't need another verb in this construction. It can be tempting to try use 是 (shì), as English uses "to be," but this is not correct. 在 (zài) is the only verb needed.
我在上海。--- Wǒ zài Shànghǎi. --- I'm in Shanghai.
他们在英国。--- Tāmen zài Yīngguó. --- They're in England.
老板在外面。--- Lǎobǎn zài wàimiàn. --- The boss is outside.
他不在学校。--- Tā bù zài xuéxiào. --- He's not at school.
Don't we follow the STPVO format here? In which case the verb 住 follows the place 在台湾?
An earlier question translated as She lives in taiwan was worded: 她夹在台湾。 (Duo's stating that translating that Chinese sentence into the English equivalent.) However, when I translated it that way, it counted it wrong. There is a lack of consistency. Also some of the recordings say "你“ but the written is "我”， or the other way around. So you get them wrong, because you don't know which one they want.
《人》 means "people" or "person". It would not make sense to say "She lives in a Taiwanese person", even if it does sound funny.