"Duo kauft ein Schloss in Österreich."
Translation:Duo buys a palace in Austria.
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You have probably forgotten about this pearl here: https://forum.duolingo.com/comment/26544922/Duo-has-teeth-made-from-gold
Oe seems like the standard substitution for Ö when umlauts are not possible or otherwise easily accessible. I imagine that that way of writing is informal, but it appears to be academically acceptible when umlauts are not possible (as in URLs). Replacing the Ö with just an O does not appear to work as a substitution, so that would be a misspelling.