I read somewhere that if you phone is hacked you might see shell somewhere on your android is this true? And if not how could I tell if some one used my IP address to watch my screen?
The shell (named sh) is the Linux equivalent of the command prompt in Windows. It's there whether your phone has been hacked or not - it's part of the operating system of the phone.
If you find one named shell, it got there somehow, but that still doesn't mean that the phone was hacked (unless you consider someone using your phone "hacking").