In this sentence we have "le" = "them" which is a direct object pronoun (le is directly receiving the action of the verb), while you're thinking about indirect object pronoun "le" = "a lei" = "to her".
For this sentence to be translated as "I can teach her how to drive" Italian sentence should be "La posso insegnare come quidare".
check this link for more examples http://www.cyberitalian.com/en/html/gra_prpr.html
EDIT: I made a mistake... "Le" = "a lei" = "to her" in this sentence is indirect object pronoun
- list of some common Italian verbs that are used with indirect object pronouns: http://italian.about.com/library/fare/blfare117b.htm
Laura is right, "le posso insegnare " means "I can teach her", "gli posso insegnare" means "I can teach them". "La posso insegnare come guidare" makes no sense. If you say "la guardo" you can also say "guardo lei", this is a direct object, but if you say "le insegno" you should say "insegno a lei" this is an indirect object (in Italian is called complemento di termine). Actually "le posso insegnare" can be a direct object, but not in this context.
So you are saying that duolingo made a mistake? It should be "Gli posso insegnare come guidare" for it to be translated as "I can teach them how to drive" like duolingo suggests?
I am asking because "le" is not listed in tables as indirect object pronoun for 3rd person plural instead there is "gli" (for masculine and feminine) and "loro" (not so common in formal writing)