Delete the Form 8606 and make the necessary entries in step-by-step mode.
The fact that TurboTax shows a penalty implies that you made a separate error by entering a regular contribution under Deductions & Credits. Go back and remove anything related to the Roth conversion that you entered there. Only regular traditional or Roth IRA contributions are to be entered there, nothing about conversions.
The Form 1099-R for the distribution that you described should have code 7 in box 7 and the IRA/SEP/SIMPLE box marked. After entering the details of this Form 1099-R, indicate the amount that was RMD, indicate that you moved the money to another retirement account, that you did a combination of rolling over, converting and cashing out, then indicate the amount converted. TurboTax will automatically prepare Form 8606 Part II to report the Roth conversion.
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