Why is, "I cannot understand" not accepted? "I am not understanding" isn't really English!
It's English present progressive tense, and absolutely correct. It may not feel natural to you out of context, but it's the same construction as "I am riding a bicycle."
Because you are learning a different language not English. The way things are spoken that are familiar in English may not be direct translations in other languages or may not exist.
Would "I do not understand xyz" be a fitting translation? "I am not understanding xyz" just feels clunky in English
Because "I am not understanding" is a more direct translation, so that it's easier to understand what's going on.