For this week's topic, you are encouraged to think out of the box, and not to write literally about an actual wolf wearing wool. This literal interpretation is very limiting, and the judges will quickly grow weary of reading wolf stories.
Rather, you should write an entry that incorporates the meaning of this idiom:
A person who is dangerous, but who puts on an appearance of harmlessness, usually for personal gain or manipulation.
Obviously, there are many ways that one could build this scenario into a story, and you do not have to mention actual wolves or sheep at all. An entry that uses the idiomatic meaning of this prompt would definitely be on topic, and would actually be preferable to the literal interpretation.