You are wrong. "There is a strange noise in THE street" is ok but "there is a strange noise in THIS street" is not ok. The first sentence means the speaker knows the noise is coming from where the cars actually drive as opposed to one of the buildings or yards next to where the cars drive. Notice however that saying "IN the street" instead of "ON the street" limits where the noise is coming from and I'm not sure that is what the Arabic sentence was trying to do. There is a strange noise ON this street would mean the noise could be coming from anywhere along this street including where the cars drive and also any of the houses or properties along it that are accessed from it.
There is a strange noise in THIS street would mean the noise is coming from the actual inside of the street as in from the asphalt or the dirt which make up the road. I don't think the Arabic sentence wanted to say that there is some bizarre thing happening inside the gravel and tar of which the road is made. Like Dracula got buried inside the road and is clawing his way up out of it?