I have found that the Spanish "lo" does tend to crossover into the English "that" more than the direct translation would suggest.
However, that distinction is probably impossible to accurately program into duolingo.
I suggest to keep this in mind, listen to native speakers, and when answering duolingo, you will probably have to stick with the more direct translation.
To AuthenticZephyr: I think "No me digas" is, in the present situation, Negative Imperative, just like in Portuguese "Não me digas" and in both languages (Spanish and Portuguese) the subject of the phrase is 'tú' (Spanish) and 'tu' (Portuguese). The duolingo's phrase "no me lo diga!" is in the Negative Imperative as well and its subject is "usted". I hope I have helped. Greetings. October 16, 2014.
Yes; for negative commands, the imperative forms are usually the same as the subjunctive. The positive informal (tú) commands usually look like the indicative Usted form.
Decir is irregular, though. For the informal, it's "di". So, "Tell me!" becomes, "¡Dime!" And "Don't tell me!" becomes "¡No me digas!" With the formal, it's, "¡Dígame!" or "¡No me diga!"