What's the difference between τροφή and φαγητό? Is the latter the prepared meal and the first just the 'material' (used for it)?
In a way yes..Though the word '' τροφή'' can be used as a metaphor too, like for example '' Τα βιβλία είναι η τροφή της σκέψης.
I put "Το κρέας χρησιμοποιείται για το φαγητό" and was marked incorrect. Why??
It's the presence of the definite article that makes it sound as if you were talking about a specific dish. "Το κρέας χρησιμοποιείται για φαγητό" is correct and one of the included translations.