As @Bsch4477 said, you cannot claim your 1st daughter's education expenses because she is not you dependent. She and her spouse can claim the Lifetime Learning Credit (LLC)on their tax return, but not the American Opportunity credit (AOC)because of the 4 time limit.
Despite her not being your dependent, you can use you 529 plan, tax free, to pay her loan (up to $10,000). This is because she is the "beneficiary" of the plan. If you took a $12,000 distribution, you still claim the extra $2000 as tax free by allocating it to her college room and board (even if she lived off campus). Again, you can do this because she is the beneficiary, even if not your dependent. This will not affect the newlywed's ability to claim the LLC, on their return, because room and board are not qualified expenses for the LLC (but are qualified for a 529 distribution).
As for your 2nd daughter, she is eligible for the AOC, on your return. $58K - 53K = $5K which is enough for the full AOC. You don't mention a 529 for the 2nd daughter. You can't double dip (count the same expenses for the AOC and 529 distribution).Claim the AOC before you claim the 529 earnings exclusion.
Otherwise, you've entered something wrong. Try deleting the student and re-entering the info.
