In order for your wife to qualify for the exclusion, two main criteria must be met, and my bet is she doesn't meet either one.
1. Must have owned the home for a minimum of 2 years (720 days)
2. Must have been their primary residence for at least 2 of the last 5 years they owned it.
For #1, it doesn't appear your wife owned the home for at least two years.
For #2, from the way I see things, that home was not her primary residence for at least 2 of the last five years she owned it. As I'm interpreting things, the home was never her primary residence.
