It is necessary in Portuguese. As Paulenrique says, it is like "we met ourselves"; however in more natural English, it would be more like "We met/meet each other in another occasion". The "nós nos encontramos" is commonly used in Portuguese, but the sentence itself is as awkward as it would be in English. =)
I tried the answer "We have met each other
in on another occasion" and I also was marked wrong.
According to Vivisaurus' description this should be ok: https://forum.duolingo.com/comment/333201$comment_id=646264
There even is a hint for the 2nd "nos" as "each other".
There probably is no way to make a 2nd report for the same sentence again to try your answer and re-report it as very likely only one and not two reports will show up in the Incubator.