הייתי במוזיאון הזה עם אחותי, והיא אמרה שהתמונה הכי יפה שם בקומה השנייה.

Because Hebrew verbs usually already show the subject, especially in the past tense.

הייתי means I was.
The ending tells you it is first person singular.

So:

• הייתי = I was
• אני הייתי = I was too, but with extra emphasis on I

In normal speech, Hebrew often leaves out subject pronouns unless they are needed for contrast or emphasis.

במוזיאון is made of:

• ב־ = in / at
• ה־ = the
• מוזיאון = museum

When ב־ comes before ה־, they combine:

• ב + ה + מוזיאון → במוזיאון

So במוזיאון הזה means in this museum or at this museum.

In Hebrew, demonstratives like this and that usually come after the noun.

So:

• המוזיאון הזה = this museum
• הספר הזה = this book
• הילדה הזאת = this girl

Because there is also the preposition ב־ attached here, המוזיאון הזה becomes במוזיאון הזה = in this museum.

Hebrew can show possession by adding endings directly to nouns.

• אחות = sister
• אחותי = my sister

The ־י ending here means my.

This is very common in Hebrew:

• ספרי = my book
• אחי = my brother
• שמי = my name

So עם אחותי literally means with my sister.

The ו־ is פשוט the word and attached to the next word.

So:

• היא = she
• והיא = and she

Hebrew very often attaches short words like and, in, to, the, that directly to the following word.

Because the subject is feminine singular: היא = she.

In the past tense, Hebrew verbs change according to gender and number.

• הוא אמר = he said
• היא אמרה = she said

So והיא אמרה means and she said.

The ש־ means that.

So:

• התמונה = the picture
• שהתמונה = that the picture

In this sentence, it introduces the content of what she said:

• היא אמרה ש... = she said that...

This ש־ is extremely common in spoken and written Hebrew.

In present-tense Hebrew, the verb to be is usually omitted.

So Hebrew often says:

• הוא בבית = he is at home
• הספר על השולחן = the book is on the table
• התמונה בקומה השנייה = the picture is on the second floor

That is why the sentence does not need a separate word for is.

הכי means most, and יפה means beautiful / pretty.

So:

• יפה = beautiful
• הכי יפה = most beautiful / prettiest

Hebrew often forms the superlative with הכי + adjective:

• הכי גדול = the biggest
• הכי טוב = the best
• הכי יפה = the prettiest

So התמונה הכי יפה means the prettiest picture or literally the most beautiful picture.

Because many adjectives in Hebrew do change for gender, but יפה is a special case in pronunciation and spelling: its masculine singular and feminine singular look the same in normal writing.

Examples:

• ילד יפה = a handsome/beautiful boy
• ילדה יפה = a beautiful girl
• תמונה יפה = a beautiful picture

So יפה fits תמונה, even though תמונה is feminine.

Here it means there.

Hebrew שם can mean:

• there
• name

Context tells you which meaning is intended.

In this sentence, שם clearly means there, referring to the museum:

• התמונה הכי יפה שם = the prettiest picture there

It literally means on the second floor or on the second story.

It is made of:

• ב־ = in / on / at
• קומה = floor / story
• השנייה = the second

So:

• בקומה השנייה = on the second floor

English uses on with floors, but Hebrew commonly uses ב־ here.

Because קומה is a feminine noun, and adjectives/numbers used like adjectives must agree with it.

• קומה = feminine
• therefore second must be feminine too: שנייה

Compare:

• הספר השני = the second book (masculine noun)
• הקומה השנייה = the second floor (feminine noun)

So the feminine form is required here.

Yes, word-for-word it is close to that.

A rough breakdown is:

• התמונה = the picture
• הכי יפה = most beautiful
• שם = there
• בקומה השנייה = on the second floor

More natural English is: the prettiest picture there is on the second floor

Hebrew word order often does not match English exactly, even when the meaning is clear.

Usually after אמרה in a sentence like this, ש־ is the normal choice.

• היא אמרה ש... = she said that...

כי can also mean that in some formal or biblical-style contexts, but in everyday modern Hebrew, after verbs like say, think, know, hope, ש־ is much more common.

So והיא אמרה שהתמונה... sounds natural and standard.

The comma separates two connected clauses:

• הייתי במוזיאון הזה עם אחותי
• והיא אמרה שהתמונה הכי יפה שם בקומה השנייה

In English you might also write: I was at this museum with my sister, and she said...

Hebrew punctuation is often similar here. The comma helps mark the pause between the two parts of the sentence.