Even though your daughter was born Aug. of 2016, If she lived with you the entire time since her birth, then you must put that she lived with you the whole year. For tax purposes, once the child is born on or before December 31st of that tax year, the child is considered to have lived with you the whole year.
Go back to the "Personal Info" section (click on the Personal Info tab on the top of the screen), click on edit next to your daughter's information. when you get the the screen that ask "How many months did son live with you in 2016?" answer "The Whole Year" to that question.
More than likely, this is the reason it is showing that she doesn't qualify. In addition, please read the below information to verify that you do qualify for this credit.
https://ttlc.intuit.com/replies/3301418
