"They are all sleeping in the room."
I probably qualify only as an (upper?) intermediate speaker, and I would certainly defer to native speakers, but to me "在房间" without "里" sounds like something you could say if you wanted to say that someone was at the (hotel) room as opposed to somewhere else, without necessarily needing to specify that they were inside of it.
I think "in the room" is generally better translated using "里". It may not be strictly necessary in this instance, but it sounds better to me.
For most verbs, and all verb-object compounds (such as "睡觉") as far as I'm aware, the adverbial location phrase precedes the verb.
There are a limited number of verbs for which the adverbial "在" phrase can come after the verb as a sort of complement. I don't know of any such verbs that are composed of two characters or more.
These exceptions to the general rule are "坐", "放", "住", "站", "待", etc., which I call "verbs of positioning". However, this exception is subject to any modification of the verb's aspect, and thus you get "他住在中国" (simple indicative aspect) but "他在中国住过" (past aspect).
Here is a really good explanation for 在 + Location+ 上 / 下 / 里 / 旁边
Here, this version of the link works:
And if that fails in the future because of some change to markdown encoding, try clicking here (but no future-proof guarantee here either).
Doesn't quite work...
Try https://resources.allsetlearning.com/chinese/grammar and then search for "Expressing location with zai...