"This woman is not bad."
Translation:यह औरत बुरी नहीं है।
Is है necessary here? I know that it is good practice to have it, but should this be counted wrong for not including it?
Yes. It is necessary.
As you may know, है is optional in most present tense sentences that contain नहीं.
However, if we remove है from this particular sentence, the sentence will have no verb which is not allowed. So, you can't remove the है in such sentences with no other verb.