I'm pretty sure "euer Kleid" is used when talking to more than one person (i.e. if 2 people own the dress) whereas "Ihr Kleid" is polite - when the person or people is/are older or more respected...and "dein Kleid" is the informal singular. Finally "ihr Kleid" means "her dress"...and I assume you won't be using "sein Kleid" much!
sartrt has a point though. I also made a mistake and answered "your dress," and was marked correct. I thought that the answer is "your dress" from ihr (2nd person plural), and thought it strange -- two people sharing a dress? Then again, my kids do that sometimes. But in that case it should be "Euer Kleid."
Come to think of it though, Jenzi is right. It should be Ihr (2nd person singular formal (sie/Sie)) or ihr (3rd person singular (from er/sie/es)) in which case the answers should be "your dress" or "her dress."