Learn German: Ein Außerirdischer soll das Raumschiff steuern. - An alien is said to pilot the spaceship.

In German, the modal verb sollen is often used to report hearsay or rumors. It indicates that you are passing on information you heard from others, but you aren't guaranteeing it's true. So instead of meaning "should" (an obligation), it means "is said to" or "supposedly".

Could this sentence also just mean "An alien should pilot the spaceship"?

Yes, grammatically it is identical to the standard use of sollen (meaning "should" or "is supposed to" as an instruction). You have to rely on context to tell them apart. If you are reading a tabloid about a UFO sighting, it means "is said to". If a movie director is explaining a scene, it means "should".

Why does the word for alien, Außerirdischer, end in -er?

Außerirdischer is a nominalized adjective, meaning it is an adjective acting as a noun. Even though it is capitalized like a regular noun, it still takes adjective endings. Since it is the masculine subject of the sentence (nominative case) and comes after the indefinite article ein, it takes the strong adjective ending -er.

Why use steuern instead of fliegen for a spaceship?

You can definitely say ein Raumschiff fliegen, but steuern specifically means to steer, to navigate, or to pilot. Using steuern puts the focus heavily on the person actually sitting at the controls and operating the complex vehicle.