Does 매일 have to come before 학교에서?
No. That doesn't matter.
학생들이 매일 학교에서 싸워.
학생들이 학교에서 매일 싸워.
매일 학생들이 학교에서 싸워.
All are okay above.
I got it wrong because of that as well...
Not necessarily, but it could.
I got it wrong because of that, as well...
what's wrong with 학생들은?
That is grammatical and I think it would be understood in context. But in this case "the students" makes it sound like a specific small group of students is being discussed, rather than just "students" in general. So 이 is used.