TurboTax does not call a rollover a recharacterization. If TurboTax says anything about a recharacterization (or "switching" a contribution), you 've either entered something incorrectly or the financial institution is reporting a recharacterization (code N or R in box 7 of the Form 1099-R).
"-I have a 1099-R form containing the $17.5K "
What about the Form 1099-R with $3.5k in box 1? If a total of $21k came out of your 403(b), you must have Forms 1099-R with box-1 amounts that total $21k.
Unless the $3.5k was an RMD, it makes no sense that you would report the $3.5k as a distribution paid to you and you subsequently used the cash to make a Roth IRA contribution that was otherwise independent of the distribution from the 403(b). This would instead be a rollover, possibly (perhaps even probably) taxable, to the Roth IRA, not a new Roth IRA contribution.
You also made no new regular contribution to the traditional IRA. It's extremely likely that nothing about this should be entered under Deductions & Credits.
You should have either two or three Forms 1099-R, one or two from the 403(b) totaling $21k and one from the traditional IRA for $17.5k. What are the codes in each of these Forms 1099-R?
