When they say "Australian indigenous language", they mean "language spoken by indigenous Australians", right? Because it seems that Kriol contains way too much English to be considered a truly indigenous language.

Kriol arose on Roper River Station in the (late) 1880s, so could be said to be Indigenous in that way too. It's a language spoken primarily by Indigenous Australians and is "endemic" in the biological sense (maybe autochthonous is also an appropriate term here). It's true that it's not a language that is genetically related to the pre-European settlement languages, though.

It's true that it's not a language that is genetically related to the pre-European settlement languages, though.

I would disagree. An offspring is related to both of its parents. While most of the vocabulary of Kriol is from English, most of the phonology and grammar is from various Australian aboriginal languages.

Kriol's phonology related to Australian languages, yes, but its grammar certainly isn't. Kriol grammar is pretty close to that of the various Pacific Ocean pidgins, and has its origins in Austronesian, English, and (probably) the grammar of typical Atlantic pidgins.

For example, it makes extensive use of prepositions like "long". No Australian languages has prepositions (except Tiwi).

Kriol has many parents, Andrew. English is one, but so is an Australian pidgin in use in the Roper River areas, as well as several (unrelated) Australian languages. I follow standard practice in treating the creation of Kriols like this as separate from the transmission of language from parents to kids, since RR Kriol seems to have been as much as adult language creation as anything else. To add to John's examples, Kriol's SVO and fairly rigidly so, whereas the input languages are, iirc, either verb-final or nonconfigurational.