。
She lives alone in that room.
Literal
She [topic-は] alone that room [in-に] is-living.
住んでいる ('lives, is living') uses ~ている not for ongoing action but for resulting/persistent state — once you start living somewhere, the て-state describes the standing fact of living there. This is the same pattern as 知っている ('know,' lit. 'have-come-to-know-and-still-know'), 結婚している ('be married'), 持っている ('have, possess'). Note 住む is written in kana here (すんでいる) — a stylistic choice that softens the prose; the kanji 住 is everyday-frequency but writers often go kana for common verbs. に marks the static location for verbs of existence and residence.