Vingt-trois heures trente-cinq might be a clumsy way of expressing 'twenty five to midnight' but surely it is not incorrect?
You are right in thinking that it is technically correct but I'm not sure you'd hear it in Fench as much as -
Minuit moins vingt-cinq
If it is marked wrong in a quiz you could query by using the 'report it' button on your correction board, which will link to the specific quiz.
Hope this helps!
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