Merriam-Webster Unabridged does not flag hitherto as "archaic."
Macmillan does mark hitherthohitherto as "very formal" but it's by no means outdated.
Whoever marked you down for using an "archaic" word is wrong (unless perhaps you were using hitherto in an informal context).
(Disclaimer: I read enough fantasy literature that hitherto seems rather ordinary to me.)