Could it be Mirror Mirror from 1990 (even though you recall an earlier date than that)? I can't recall whether or not there is a scene with a yellow dress, but it does have a possessed mirror...
Plot summary from IMDB:
Shy teenager Megan moves to a new town with her widowed mother and
quickly becomes the most unpopular girl in high school. But when she
starts to communicate with a mysterious mirror, her tormentors begin
to meet with a horrifying series of 'accidents'. Is the mirror a
reflection of Megan's own inner demons... or has she unwittingly
opened the doorway of the damned?
Megan Gordon is a shy Goth girl who moves into a new neighborhood from
Los Angeles with her recently widowed mother Susan. On moving into her
new home, Megan finds an antique framed mirror in her room which
belonged to the original owners of the house, and despite an attempt
to remove it from the house, it mysteriously appears back in place.
Slowly, Megan comes to realize that the mirror can grant her special
powers, enabling her to have vengeance on her tormentors. However, the
antiques dealer who was in charge of the house clearance finds an old
diary that holds the ominous secret of the mirror's past: It describes
how the mirror is possessed by a demonic force within it, which has
the power to grant requests at a deadly price...and the fate of the
previous owner's sister. As it begins to give Megan the ability to
take her revenge on her persecutors, she slowly becomes dependent on
the mirror, and soon it takes her over. As the death toll mounts, both
Megan's enemies and her friends suffer as the demonic force reaches
out and grows in strength. Armed only with a dagger and a vague
knowledge of how the demonic mirror can be stopped, Nikki sets out to
confront Megan and her mirror, before it is too late.