Does this sentence make sense in English? It doesn't to me. To be serving time is to be in jail.
Yes, that is one of the meanings of the Norwegian sentence.
Idiomatically it means to 'be in jail/serve time', but it also has the straightforward meaning of 'sitting inside' any building.
Got it! Okay, that makes sense, and I guess that's useful to know. As an exercise it's really difficult though! I was asking myself, "Have I learned how to say 'serving' and just forgot it?"
Yes, the English-to-Norwegian sentence would definitely be tricky without hints! That's the case with most idiomatic expressions, but they're still an important part of both languages. :)
He sits inside?
The same as in German: Er sitzt ein. = Er sitzt in Haft.