What does it mean if she says she needs time?

With many guys (but not all) it means they want all the fringe benefits (such as a sexual relationship) without committing to a relationship. Some guys will tell you this because they truly aren't ready to have a relationship and if they were decent about it they would move on and let you move on. Women have total control when it comes to such a remark, so if you're smart give him all the space he wants ... kick his butt out the door!