First ... her and her new husband have the right to file a joint return and claim the education credit no matter who paid the actual bill ... so before either of you file you really need to look at the situation both ways since there is a $12,200 filing status exemption vs a $500 credit to consider which may come into play.
Next ... I think you missed either the box saying she was a full time student OR you indicated she provided more than 1/2 of her support. Review all the follow up screens carefully in the dependent section ... you may want to delete the child and start that section again.
