You're absolutely right about いいえ not being used as "no" in most cases. I can't recall the last time I heard a native speaker actually use it. Here are some of the most common ways I've heard the meaning of "no" being expressed:
違うよ - "to differ".
Speaker 1: お寿司が大好きだったよね？
Speaker 2: 違うよ！お寿司が嫌い！
Speaker 1: もう寝る？
There isn't any context, so I can't be 100% sure, but the super short answer is probably that the speaker is trying to say that Mr./Ms. Morohoshi has a completely different set of values than those around him, which makes him stand out and appear quirky or possibly mildly insane.
While 「住んでる星が違う」 is certainly an exaggerated and/or metaphorical expression, I would not necessarily call it an idiomatic expression because it means what it literally means, which is "to live on another planet" as you said.
「星」 can mean "a planet" as well all by itself.
"Mr./Ms. Morohoshi lives on another ...