dyama,
I'm away from my home PC for s few days but (a) with respect to the scholarship income, I would support your attributing the scholarship (unearned) income to Iowa as she is considered a full years Iowa resident "temporarily away" and is considered to be living with you for the full year, and (b) if you are using a desktop version, you might try bringing up the 3800 form directly and entering zero for the parent's income. I've seen that type of edit to satisfy TurboTax checks for some other issues.
Also, did you explore the option of declaring more scholarship income so that you can declare some of her qualified educational expenses as out-of-pocket for the purposes of claiming the American Opportunity Credit? IRS Publication 970 goes into details on this as part of its discussion of Pell Grants.
