I find it odd that they are teaching colors without the word 色. I've never heard any Chinese speaker say something like 蓝裙子, they would say 蓝色的裙子. I'm not an expert; just saying the construction Duolingo is using seems odd.
I think it should accept "I only want this blue dress." But to clearly express "need" it likely will have to be more than "只要“. For "I only need this blue dress" you probably would have to more specifically say "我只需要这条蓝裙子“ or possibly "我只要这条蓝裙子就行了."
想 alone means "to think of", to use it in the context of "to want" it should preceeds another verb such as 我想吃, 我想要，我想做 etc so you could use 我想要 which means "I think of wanting to" which doesn't make sense in English but it does in Chinese.