You can think of the distinction as often versus frequent. One exists, but it's subtle and probably isn't worth spending a lot of time worrying about since most people use them interchangeably. When used accurately, "frequent/häufig" denotes an interval/repetition while "often/oft" does not.
The trouble is, DUO doesn't give us the slightest guidance and context, and that is the result, unfortunately. I guess/hope they working on it.
I was exactly on the same way like Musetta, and I can tell why, the word order implies exactly what Musetta and Germandy thought it might be.
The correct word order to get the English
"He is often in Europe" would be:
"Er ist oft in Europa" "Er befindet sich oft in Europa" "Er verweilt oft in Europa"
"He" is the default translation and is perfectly fine. As for "it," German assigns pronouns based on their grammatical gender-- so a "Tisch" (masc.) is referred to as "er" even though we use "it" for a table in English, and a "Maschine" (fem.) is "sie." Even a "Mädchen" (neut.) can be referred to as "es" even though it refers to a girl.
Since we don't really know what "er" is referring to, it could be "he," referring to a male person, or "it," referring to a grammatically masculine object. (Based on the wording of the sentence, it's probably a person, but who knows?)
That sentence doesn't make any sense; a person cannot be "frequent." The correct answer is "He is frequently in Europe."
The hints are there to remind you of the meaning of the word, not to tell you the exact usage in the sentence. So even though the hint says "frequent," you need to figure out that it needs to be an adverb here and use "frequently."
That would be describing "he" as "common," which doesn't really make sense and isn't what the sentence is saying. "Häufig" is an adverb here. "Common(ly)" is also mostly used for describing a group of things (say, a species of animals) that you can often find some of somewhere, rather than an individual ("Kangaroos are common in Australia.") Your best choice for "häufig" is "often" or "frequently."