Yes, you will add in your wife's refund in the section "Refunds Received for State/Local Tax Returns". Her State Refund will only be taxable if she itemized last year.
As for your State Tax Payment from last year, you will enter that amount under the option you mentioned above "We made a payment when we filed our 2016 MA Tax Return. This amount will be deductible on Schedule A if you Itemize Your Deductions.
You were on the right track but were understandably thrown off by the use of "we" instead of "you"! Because this is your first year filing together, the wording can be a little confusing. Everything is combined when you file a Joint Return and the program doesn't differentiate between first time Joint Filers and Filers that have filed Joint for years.
If you have any other questions regarding last year's State Refund or Balance Due please comment below so I can help you further.
