I has assumed that "At my request, I kept her "inherited" account separate from mine, so I now have 2 traditional IRAs" meant that you maintained the account as an inherited account. The code 7 in box 7 indicates that my assumption was incorrect and that you assumed ownership of your wife's account. Ignore everything in my previous reply having to to with how distributions from inherited IRAs are handled.
Keeping the account as a separate account has no effect on how distributions form your two IRAs are taxed. For tax purposes, both accounts are treated together as a single account, so there is no tax benefit to keeping the accounts separate.
With regard to the basis in nondeductible traditional IRA contributions acquired from your wife, you must indicate to TurboTax that you have made nondeductible traditional IRA contributions, then, when presented with the opportunity, click the EasyGuide button and indicate that you inherited basis from your spouse and enter the amount of basis acquired. TurboTax will ask you to provide explanation for this adjustment to your basis.
