Can someone enlighten me, please?

The only error I see in it is it should be, "couple of minutes."

Sometimes Microsoft Word makes mistakes. I see them all the time!

Microsoft does not recognize that the word "You" is implied**, and Microsoft would naturally want to add "of" in between "couple" and "minutes".

**"(You) use the last couple minutes prior to exam distribution to gather and organize all of your thoughts."

The rules of grammar, as applied by a computer program, can be very stilted.

The word "use" confuses the grammar check.

In this sentence, it is a verb at the beginning of a command.

We understand the subject to be "you". The computer isn't smart enough to understand this implied subject.

(The word "use" can also be a noun ... so the computer may be looking for a verb, which is hasn't found.)

The sentence is correct.

it's grammatically correct even though it sounds a bit strange.

you need to add an "of" after couple