So confused

I have a stages power meter and garmin edge 520, can i start using zwift now? If so, how?

Download Zwift, get a USB extension cable and an Ant+ dongle and you should be all set (I would also recommend a heart rate monitor) . You can also use Bluetooth. You will need to download the Zwift app to bridge the connection if you have a PC, but if you have a Mac you can connect it directly.

The Edge 520 is not needed at all.

So could I use bluetooth instead of an Ant+ dongle?

If the Stages broadcast in BLE.