"He drinks milk and we drink water."
Translation:Ólann sé bainne agus ólaimid uisce.
From my understanding, "ólann muid/sinn" is the analytic form of "ólaimid". So why isn't "ólann muid" an accepted answer? I reported it.
No, it's not a "mistake", it's an omission.
The course is designed to teach the synthetic form ólaimid. There are no exercises that use the analytic form of first person plural present tense verbs.
A massive amount of additional work has been done to add all sorts of alternative answers to accommodate people who have learned Irish elsewhere, and who aren't actually interested in learning the Irish that Duolingo is designed to teach. If you have used the analytic form ólann muid in other exercises, Duolingo has let it slide. If you have encountered ólann muid on Duolingo it is in the sentence discussions where other users have suggested it as an alternative answer. If it bothers you to be told that your answer is wrong, use the forms that Duolingo teaches. If you've learned Irish elsewhere, and you're confident that your version is also correct in a particular dialect, then you don't need Duolingo to adjudicate whether your answer is right or wrong. If you're not confident that your answer is right, then decide which particular dialect you want to learn, and, if it isn't An Caighdeán Oifigiúil, Standard Irish, deal with the fact that your non-Caighdeán responses won't always be accepted.
The pronoun sé is the subject of the verb.
Putting the object before the subject is really wrong in Irish, and when a 3rd person pronoun occurs in the direct object position in a sentence, it becomes é, not sé. Olann bainne é is grammatically correct, though logically incorrect.