Translation:We watch you and do what you do.
"Jou" is the object pronoun, as it is used as the object in the first clause. "Jij" is the subject pronoun a different clause, because it is used in the subject of the that clause. It is like the difference between "we" and "us" in English, except we have only "you" for both object (jou) and subject (jij). Keep in mind, however, that both "jij" and "je" are subject pronouns. Hope that helped.
Good heavens, naar (like zijn) seems to have endless meanings.. On Duo, I have counted four thus far: to, towards, for, at. But in this sentence, at seems to work best. If the sentence were, "We look to our leader for guidance", yep, naar would be used, but then it would mean "to".
I am imagining two Dutch factory workers watching some new gizmo roll off an assembly line. "What shall we call it? How about a 'zijn'? Or a 'naar'. Yes, that sounds good..."
Prepositions are notoriously vague and variable and hard to grasp in every language. At ita core, naar expresses a direction towards something - everything else is idiomatic and no different from English to, on, or for being used seemingly at random. It's better to unserstand its bare meaning and then think of how English would express the same thing than to try to establish exact equivalences between prepositions in different languages.
So that's random ... I re-did the question a moment ago and it accepted "We look at you and do what you do"! So it's not the "look at vs. watch" distinction ... it's the use of present continuous. That's rather petty since the continuous is accepted almost universally in these lessons. Go figure.