Right, because "왼쪽에 있는" is an adjective clause (descriptive verb) it needs to come before the noun it's modifying. The same is true of other 'who' clauses that modify a noun (the man who is walking). This is actually more simple than English in my opinion, but it takes some getting used to.
First: adjectives are verbs first in Korean, the base is "to be pretty" not "pretty". In order to make an adjective that modifies a noun, it must be changed by adding ~ㄴ/은 to the verb stem (the verb without 다). eg. 비싸다 (to be expensive) -> 비싼 (expensive).
비싼 책 - an expensive book
Because of this, "to exist on the left" becomes an adjective in the same way "to be pretty" becomes an adjective in Korean. Therefore they are used the same way: by adding ~ㄴ/은 to the verb stem (the verb without 다) and placing it before the noun. Because they work the same way, adjective verbs can be full phrases, like what happens in "to be on the left", "to be walking in the park".
예쁘다 -> 예쁜 예쁜 여자 - the pretty woman
왼쪽에 있는 책 - the book on the left (could be literally translated the left(location) existing book)
왼쪽에 있는 사람 - the person on the left (literally, the left-existing person)
If you're still confused, here are some links
It's because of a particle 에. The most common meaning of it is "to go somewhere", or when something "is" at the location. And because of that, the verb of motion immediately follows it, or in case of "to be at location" the adjective 있다.
에 also have other meanings, when a noun is following it, but in that case, it would have another connotation.
It's possible to rewrite this sentence without 있는, for that you need another particle 의, the purpose of which is to describe nouns with another noun. 왼쪽 is a noun.
"왼쪽의 책은 재미있어요."
The meaning, of course, stays the same, so I think you got it wrong because Duolingo just wants to be sure that you understand that regardless of the same meaning, your sentences and "The book on the left is interesting." have different word order.
The book on the left is interesting.- 왼쪽에 있는 책은 재미있어요. The interesting book is on the left. - 재미있는 책은 완쪽에 있어요.