Can "Polisen" also mean the entirety of police officers? Like you would say in English and German "The police will fight the crime" which is not only one police officer... or would you have to use poliserna?
Yes, so you can't tell here whether it's one police officer or the force as a whole that is meant.
Is this solely a giving of physical direction, or would it include showing a proper way of living?
Väg = Road
Street = Gata
All streets are roads, but not all roads are streets.
I used "indicate" instead of show, I think it should be correct....to indicate the way
Isn't "The police show the way." incorrect? I had a typo in my answer, but Duolingo says this is correct.
I think if you refer to 'the police' as a group of people that would be fine. Something like 'People show the way'
"The police officer shows the way" seems like an incomplete sentence in English- I would expect the sentence to include a location which the officer is showing them to. I tried "The police officer leads the way" but it was marked incorrect. Is the meaning too different or should should this be flagged as another correct answer?
"The police shows the way" is a complete sentence in English. It just means that in a conversation the pace/location is already known or previously mentioned.
If it makes sense in spoken or written language, it is gramtically correct, even if grammar books say otherwise.
Too different, that'd rather be "Polisen leder vägen" or something like that.