suggest going through this IRS website and answering the questions - it will explain what is occurring in about 5 minutes!
https://www.irs.gov/help/ita/does-my-childdependent-qualify-for-the-child-tax-credit-or-the-credit-f...
Is it possible you are answering one of the questions incorrectly as Turbo Tax mimics these IRS requirements? I tested this in my TT Deluxe Desktop version and it provided the $2000 credit for the step-child so i suspect it's the way you answered one of the questions.
the child has an SS# and you and your wife are filing joint? did you recheck the birth date (if you mistyped and shows child is over 16, that could be a reason) ?
did you answer that the child is your wife's child and that should have caused TT to ask questions about custody agreements which is where you'd reflect it's your year to take the credit. did you answer that the biological father is not taking the credit this year Ithat is a question)
