No, when talking about an owl, you would use "den". The "det" in the beginning of the sentence means "it" or "that" as an unknown entity (you don't know, so you are asking). Once you know it's an owl, you would use "den". So: Er det en ugle? Ja, den er sød. Is it an owl? Yes, it is sweet.
I can't think of a good example in English. Maybe: Is it a boy? Yes, he is sweet. Here you go from "it" to "he". Does that make sense?
Breaking News: Sightings of A Green Owl from a website called Duolingo Spotted XD
The app should consider accepting "Is THIS an owl? ". It has not been accepted for me.
I didn't read it - I focused on what I heard, which was "Er det en øl?" It wasn't.