Is it incorrect to answer a 是不是 question with 对 or 不对?
阿里 took 丁波's question "她家离学校是不是不太远？" (Is her home not too far from school?) as a rhetorical question--  a statement await confirmation.

阿里 presumed 丁波 knew the girl's house was near by the school.  Therefore,  he replied "对"  to confirm 丁波's statement was correct.

If it was a real question that 丁波 did not know the answer, the reply of '是不是' should be either '是' or '不是' 

Example:

"她家离学校是远还是不远？" (She wants to know is the girl's house far away from school or near by it)

Then the answer should be either "是很远" or "不是很远"

As for why 阿里 presumed 丁波 knew the girl's house was near by the school, it could be some indication in 丁波's earlier statement, 

For example: 

丁波: "She told me that she always go home for lunch, but the school lunch time is only one hour, is her house not far from school?"

From the details in the question, we know "is her house not far from school?" is a rhetorical question.

阿里 can then replies : "是"(yes), "她家离学校不是太远" or "对" (correct), "她家离学校不是太远."