Matrix $\mathbf{D}$ is a full rank diagonal matrix. $\mathbf{ADA}^T=\mathbf{D}$.
Can we conclude that $\mathbf{A}^2=\mathbf{I}_n$? (edited from $\mathbf{A}=\pm\mathbf{I}$)
It's almost sure that some one has asked this question before, but I cannot find proper keywords to search for that post.
No. Consider $$ A = \begin{bmatrix} 1 & 0 \\ 0 & -1 \end{bmatrix}\\ D = \begin{bmatrix} 2 & 0 \\ 0 & 2 \end{bmatrix} $$
Often looking at the $2 \times 2$ case for problems like this will help you get a good idea of what's going on in general.
NB: I'm assuming that this wasn't a HW problem, because I'd hate to think that somewhere out there is a prof who writes things this badly.
NB 2: This answer the question whether you meant $A^t$ or $A^{-1}$, as they are the same in this case.