Any taxable part of the scholarship is reported on the student's return, not the parent's. You need to find out why Box 1 is 0. The part of the scholarship that paid for tuition, fees, books, computers and other required course materials is tax free,
Q. Is it ok that my husband and I claim other education expenses (computer, enrollment fee) on our taxes since we used the 529 for that?
A. Yes, as long as you don't duplicated expenses she used to have a portion of her scholarship be tax free.
But, better yet, you may claim her room and board for the 529 distribution, even though R&B was paid by scholarship. The fact that your daughter is declaring the R&B part of her scholarship as income, means those expenses were paid with HER money, not by tax free scholarship. That means the expenses are eligible for the 529 distribution. It's effectively a tax loophole.
Speaking of loop holes, you may be able to claim a tuition credit, even though she is on "full ride".
The student reports all her scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on her return. That way, the parents can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
