If you choose to treat your wife's income as non-taxable by New York State, you would allocate zero income to NY when you do her non-resident NY return. TT will allow you to do this. Doing this will result in your being refunded the NY taxes that her employer withheld.
You might consider printing and mailing your NY return, along with a note explaining the discrepancy between her W-2 and her NY return.
I reviewed that 2006 New York State memo. The first paragraph contains this sentence:
"The memorandum addresses situations where a nonresident or part-year resident employee whose assigned or primary work location is in New York State performs services for an employer at that location and at a home office located outside of New York State."
https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
