"Is that our teacher?"
I am under the impresion that "那个人是我爸爸" means "that person (in general) is my dad" but "那个是我爸爸" means "that is my dad". But I am not sure.
I just don't understand when we use "那个是" and when "那是".
"That is.." vs. "That person is..."
In the first example "that" is a demonstrative pronoun, and in the second it is a demonstrative adjective. I think it is the same difference in Mandarin. In the sentence to be translated there is no reference to "person": you just need to say "that is.." not "that person is...". Although the meaning is the same, your sentence is not a sufficiently literal translation for Duo apparently.
I learned previously that "na" and "ma" shouldn't be used in the same sentence? I would appreciate some clarification.
perhaps you're confusing "那" (nà) with "哪" (nǎ). The former refers to "that" while the latter is a question word "where". You can use "那" with "吗", but you can't use "哪" with "吗". "吗" indicates a yes/no question, while "哪" demands more information-- they must be separate. ex. 他是哪儿？那个人知道吗？ (Where is he? Does that person know?)
They can be together. If you use "ma" at the end you make it a "yes/no" question without altering the meaning. At least this is what I understood so far
That should be fine, I would only recommend 他／她 instead of 那, but I think the original sentence is also okay. I have definitely found that many answers that are correct are not in the system as correct.