I believe that the subject of 要る is the thing that is needed, NOT the person doing the needing. Although this structure might seem improper in English, it obviously isn’t, because “It is needed” is a valid sentence. Plus, learning this correctly to begin with will help learners of Japanese to use the vocabulary correctly. I think “To Need” should be marked incorrect, and the correct answer be “To Be Needed”.
In the strictest sense, you are correct, yes, but in sentences it’s quite typical to use it in constructions where “to need” would be used in the equivalent English sentence. For example 私は金が要る - “I need money”. True, a literal translation would be “for me, money is needed”, but nobody talks like that.
Plus, it’s already got “to be needed” as an alternate answer.
While I totally agree with you, it’d be more accurate to say that English speakers don’t talk like that. On the other hand, this is a prime example of what Cure Dolly says is the down fall of so many Japanese courses that teach us “to speak this way.” 