"You live in Philadelphia."
No, here we have a locative. The locative case was almost gone, only used with cities, small island, domus, rus, and humus. I might have missed a word or two. You don't use in with the locative.
'habitas Philadelphiae' should also work with Latin's flexible word order.
I wrote “vos Philadelphiae habitatis”. Why is that wrong? The prompt did not specify plural or singular