"Everyone should sleep."
Translation:सबको सोना चाहिए।
It's better to think of the form चाहिए as being a separate word than the root-verb चाहना. चाहना and all its other forms always mean 'want'. चाहिए is different.
When used with a verb as in this sentence, चाहिए indicates modality ('should' or 'need to'). So this sentence conveys the second meaning you have listed.
When used with a noun, चाहिए can mean 'want' although the sentiment is a little stronger than when using other forms of चाहना. Eg: मुझे दो आम चाहिए - 'I want two mangoes'. In other contexts, it can mean 'need'. Eg: सबको जीवन में शान्ति चाहिए (Everyone needs peace in life).