Box 17 is also used to report supplemental information.  In this case it is reporting a distribution of money attributable to a state pick-up contribution.

After entering the details of this Form 1099-R (ignoring box 17), click the Continue button on the Your 1099-R Entries page and proceed to the "Where Is This Distribution From?" page.  Select the "Pickup" radio button and enter the amount shown in box 17 of your Form 1099-R.  If you do not, you'll be double-taxed on this money on your state tax return.