"Are you writing your novel?"
Translation:An bhfuil tú ag scríobh d' úrscéal?
Would this: "An scríobhann tú d' úrscéal?" be different because it would mean "Do you write your novel?", or are they actually the same?
I am getting a feeling that the "ag + verbal noun" is actually the continuous/gerund in English. Am I right?
Yes, you are correct. In native speech, except for a few verbs of sense, feeing, etc., the present is strictly habitual, and the ag construction is used for the present progressive. Also, there should be no space between d' and úrscéal, it's a bug with Duolingo.
There should NEVER be a space between the abbreviated possessive pronoun and the noun beginning with a vowel, right?
Correct. Also, remember that fh + vowel counts as a vowel, too!