How can the 'Arsh be directly above the Kaaba, despite the Earth's continuous rotation on its axis and revolution around the sun?

There is no hadith with the exact wording mentioned in the question. However, it is mentioned in the hadith of Al-Isra' wal-Mi'raj (the Night Journey and Ascension) that 70,000 angels pray in Al-Bayt Al-Ma'mur (the Frequented House) every day, and they never return to it.

Al-Tabari mentioned, citing Qatadah and Ibn Abbas, that Al-Bayt Al-Ma'mur is a mosque in the heavens directly above the Kaaba, or a house alongside the Throne, frequented by angels.

Al-Bayt Al-Ma'mur is aligned with the Throne and the Kaaba, and the Earth's rotation does not pose a problem for this, as created beings are insignificant compared to the Throne. Allah's power cannot be measured by what is in our minds, for Allah's affair is far greater than that.