Translation:Many old people live in the villages.
I might've answered your question in my comment bellow. It's correct if you imply that a lot of old people live in villages. Not really if you mean that when analyzing the villages demographically you notice there are a lot of old people living there. My thoughts on the matter.
"Many old people live in the villages." is not necessarily the same as "Det Bor många gamla människor I byarna." which should be translated as "There are many old people living in the villages." When the first expression starts from a perspective of the old people, the other sees it from the villages' perspective. I often notice this kind of ambiguous translations on Duo lingo and I find it misleading as it ignores the nuances of languages. This being said, I appreciate DL a lot and value the work behind it...
The sje-sound can be pronounced much like the wh-sound that's used in Scotland for example (that's different from the w-sound). Here it is pronounced as a sh-sound ("many sure") - this sound is used depending on the region and the position of the sound in the word - but I've also heard "many who 're" Unlike you suggested, I don't think you can ever pronounce the "k" in this word.