I'll take a whack at this, but I want any 日本人 who read this to correct me if I am wrong here.
First of all, your translation was correct.
Reading @Chocolate's comment on the other answer, it dawned on me. If I am not mistaken, 居｛お｝る can be used in way that elevates the status of the person you are talking about. For example:
Do you think that God exists?
I spent a lot of time in Japan going from door to door as a missionary, and I also heard the following phrase a lot as well:
My Husband isn't here, so we're good.
I always thought that was kind of a lame excuse, but it is a good example of the usage of おる, so I guess it all works out.
According to jisho.org, おる is usually written as kana alone. However, I wouldn't be surprised if you frequently see the kanji in use as well. I believe that the usage of おる should be carefully watched though. If you only use the plain form, it could (and probably will) be mistaken as 方言, as we've been discussing in the comments. In regards to 方言、I also suspect that おる is written as kana only.
In regards to what you saw (日本人おるか), that was very likely 方言、not the form that I discussed above. It just seems kind of rude to ask that way.