I was really scratching my head as to why the lesson seemed to think there was a difficulty about whether it should be "dans la rue" or "sur la rue".
Most people in England would say "I live in such and such street", so there's no difficulty at all in saying "J'habite dans rue such and such".
I suspect that to live "on" a street is an American usage, so perhaps the lesson should deal with that in the usual way by translating as "I live in xxxx street (US I live on xxx street)" ?
Not sure if I understand your question properly but you would say -
never 'sur la rue' which is stressed in the lesson.
You can say
J'habite rue Pasteur
J'habite la rue Pasteur
J'habite dans la rue Pasteur
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