Yes, the fact she now has a balance in a traditional IRA is the reason for the tax. You have to use the balance in all your IRAs, including rollovers in calculating the taxable portion of the conversion. That includes rollovers made in 2017.
So, for example, if you rolled over $100,000 of pretax money and made a $5500 non deductible contribution to your IRA, then converted $5500 to a Roth; only 5.2% (5500/105,500) of the conversion would be tax free. The calculations will be shown on form 8606.
This will happen every year. The rollover effectively ends the ability to do a tax free back door Roth contribution
