I answered - "there are lovely horses on eriskay" As far as I am concerned "in Eriskay" could be underground! Horses graze in fields "on" the surface, so my answer should not be flagged as wrong - only an alternative Trivial perhaps, but I was looking for 16 right in a row!!!
I do get where you're coming from, I used to say "on " until a few years ago as well and it took a big shift in my thinking to adopt "in" (funny how something so small took me so much effort to change!).
I think what did it for me was being in the Islands and telling someone that I really liked it on Lewis and they said, "would you say you're on Scotland or in it? On the UK or in it?". It was something that to me was really trivial but she was super passionate about it. Since then I've made it a point to use "in" instead of "on", even if Joanne has said that "in"/"on"/"at" can be acceptable variants due to personal usage =)
ceabhain discussed the article (correctly, despite his doubts). But I will talk about the question of how to interpret what an adjective is doing.
Any sentence in any language can have subtle shades of meaning, if you look at the sentence logically. But then not all of these will make sense in practice.
The adjective could be an attribute of the horses
Tha eich àlainn ann an Èirisgeidh
(There are) lovely horses in Eriskay
Here the whole sentence is about these lovely horses
The adjective could be a predicate to the horses in Eriskay
Tha na h-eich ann an Èirisgeidh àlainn
The horses in Eriskay are lovely
The problem is that we often mean this when we say in English
The horses are lovely in Eriskay
But whatever you do in English, I would always put the àlainn at the end in Gaelic as the eich ann an Eirisgeidh 'horses in Eriskay' are really the subject so there is no reason for putting the predicate in the middle, even if you do in English.
It is also possible the mean the horses are lovely when they are in Eriskay. This does not sound likely but let's try a different adjective - 'horses are happy in Eriskay'. Now it makes perfect sense that horses become happy when they are taken to Eriskay. I would guess that this would be Tha eich toilichte ann an Èirisgeidh (but it is a bit odd so you would have to ask a native speaker). So if, bizarrely you wanted to suggest that horse became lovely when they went to Eriskay, I think that would be
>Tha eich àlainn ann an Èirisgeidh.
You will notice that this sentence is identical to the original, so I am suggesting that that was ambiguous in principle, if not not practice. The issue, which may have been the source of you query, is that Gaelic word order prevents you from telling if an adjective is an attribute or a predicate, if it does not change to agree with the noun. But if we use an adjective that would change, then we can tell the difference
Tha eich mhòra ann an Èirisgeidh
(There are) big horses in Eriskay
Tha eich mòr ann an Èirisgeidh
Horses are big in Eriskay
(i.e. a horse would grow bigger if taken to Eriskay)
There is some disagreement about what is correct English, so you may not get the mods to change it, but as far as I am concerned, the over-riding argument is that this is a Gaelic course not an English course and they should accept any common translation that shows you know what the Gaelic means.