'You are distinct' is an accurate translation, but would not usually be said. Something like 'you are an individual' or 'you are a distinctive person' would be better, although this probably makes it difficult for Duolingo because it is using an adjective-noun pair instead of an adjective.
But "du bist individuell" and "du bist ein Individuum" have a different ring to me in German. The latter just states that you are an individual, as are all people on earth. The former one conotes that you are a special snowflake, different from everyone else. Well, hard to explain... "Du bist individuell" isn't a very frequently used sentence anyway. If I had to find a sentence with individuell, I'd say something like "wir müssen das individuell entscheiden" (we have to decide this from case to case).
I first used "individualistic" in my answer and DL accepted it. But I agree with you, that has a different meaning from "distinct". There seems to be a word for "individualistic" in German: "individualistisch". http://www.duden.de/rechtschreibung/individualistisch. Doesn't appear to be very common though... I guess that's a good thing!
"You are an individual." Many have complained about this answer being wrong. Some of the answers why that are syntactic I agree with, however, often on duoLingo syntactic problems are forgiven when semantic is dead on. (Example: all of the idioms.) In this case: "you are an individual." is semantically correct. "You are individual" in English is awkward. I do agree "You are distnict" is probably the best translation. Of course, it is probably better to run a tight ship and mark wrong vs giving the false sense of accomplishment.