"They are wanting whisky."
Translation:Tha iad ag iarraidh uisge-beatha.
Yes that is the translation into better English. However, we are here to learn Gaelic so using the same structure as in Gaelic is better for that purpose.
Note that Gaelic does not have an ordinary simple present. We have one in English but we only use it in restricted circumstances. So while this sentence could mean 'we want whisky now', a different verb ('we drink whisky' would only mean 'we habitually drink whisky'). So Gaelic is more logical than English (at least here).
Yes, and it would be unfair if they did not accept the more normal want when translating into English. But in this sentence, where they want you to translate into Gaelic, they are helping by showing you the Gaelic structure in the English, without obscuring the meaning, so I think they have done it well.