Translation:She lived here in the year eighteen ninety.
Duo doesn't take numbers when you're translating to Spanish.
If you're translating to English it will take numbers.
This exercise translates to English so, if you got it wrong, there must have been some other error in your response.
Did you include the words the year? That may be the issue.
It's not necessary in English but that might be how the algorithm is set up.
I think with respect to your first question, mil ochocientos noventa might be the "standard way of saying it" and they're wanting us to learn that. I was originally taught that dieciocho cientos noventa would work in situations like this, but that was years ago (hence my presence here and need for review / relearning) so expressing numbers that way may've fallen out of favor/ acceptance.
The pattern I've noticed is that if you're answering in English it'll let you use the numerals, but if you're answering in Spanish it wants you to spell it out. I believe it's intentional because they want us to get practice spelling Spanish numbers (which also makes you remember the pronunciation), but the assumption is that we speak English already, so they don't need to make us practice spelling out the English numbers.
If you do find them rejecting numerals in an English answer in some sentences, I think it's fair to report it.
kingclutch ... You are required to spell out numbers when translating English to Spanish. (and rightfully so as we want to learn how to spell Spanish words) DL takes for granted you know how to spell in English and does not require numbers to be spelled out when translating Spanish to English