The reason that IL was asking for both your and your wife's residency is to confirm that you did not work or reside in IL. You did not have to file a married filing separate return in IL, as once you provided the residency information it was asking, your income would have been excluded from the IL return and would only have included your wife's information.
You would have then been able to file all returns online and not have had to do one via the software and one via online. By changing the filing status for the IL I believe this is what caused TurboTax to require the separate filing of one via the software and one via online.
TurboTax Online does allow you to file more than one state return, you just pay an additional fee for each e-filed state return.
