Blood work is normal, colonoscopy is normal (no signs of ulcers or bleeding), biopsy showed ulcerative colitis. still finding blood in stool. how is this possible?

You can have disease that is not apparent to the naked eye. It may be microscopic in nature and too early to cause a change in your blood work.

Biopsy is consistent with your symptoms and the lack of visualized lesions during the scope does not rule out the disease that may go through periods of non-activity and may affect areas of the gi tract other than colon, not to mention lesions that can get missed during colonoscopy. Your best reference remains your gastroenterologist who can best integrate all in clinical context.