Yes, answer "no" when TurboTax asks whether any portion of the funds in Box 5 were "tax free employer provided assistance". You are correct, that's for a different sort of benefit (e.g., when an non-university employer pays for an employee to take classes somewhere).
Answer no, she didn't have any scholarships reported on W-2 or 1099". The $2000 is reported in box 5 as it should be. I assume the amount in box 1 of the 1098-T is $2000 less than the amount in box 5.
If the $2000 is her only income, she does not need to file a tax return. If she has only W-2 wage income, in addition and her total income is less than $12,200, she still does not need to file. Even if she had less, she is allowed to file if she needs to get back income tax withholding. She cannot get back social security or Medicare tax withholding.
You may claim a tuition credit based on out of pocket payments for books and other course materials
