Yes, she can convert the funds to Roth IRA no matter what she selects. But keep in mind if she selects to deduct the IRA contribution then any conversion will be taxable since you change it from pre-tax to after-tax. If she selects to not deduct it then she will have a basis tracked on Form 8606 and part allocated to basis will be nontaxable when converted. If pre-tax and after-tax are mixed in the traditional IRA then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part calculated on Form 8606 or the Taxable IRA Distribution Worksheet.
Yes, if she cannot get a deduction for the traditional IRA then it would be more beneficial to leave the funds in the Roth IRA.
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