"That nurse over there is my daughter."
Translation:Aquella enfermera es mi hija.
Tienes razon! 'Aquello/aquella' do not translate very well as 'over there', they only really hint at that idea. However, 'por allí', 'por ahí', or 'por allá' indicate pretty accurately where that nurse actually is and are far better translations. There's absolutely no reason why they shouldn't be accepted here.
Well, it's correct. I suppose Duo is just focusing more on simple words like "esa/aquella" and they missed your longer version (which only adds a bit more emphasis).
Esa enfermera allà es mi hija. Why is this incorrect? I do understand aquel/aquella mean "that over there".
I'm reading it as "that nurse is my daughter" I can't see where the "over there" wording comes into it.
Seems to me that "Esa enfermera allá es mi hija" should be accepted.