1. See the following IRS web page to see if the resulting $7,000 traditional IRA contribution is deductible: https://www.irs.gov/retirement-plans/ira-deduction-limits
2. The total contribution was $7,000, not $7,532. When moved to the traditional IRA, the $523 of earnings in the Roth IRA became $523 of earnings in the traditional IRA instead.
3. No. There is no excess contribution (provided she was eligible to contribute $7,000). The $523 is the amount of earnings, not part of the contribution.
Note that the amount recharacterized was $7,000, not $7,523. $7,523 was the amount transferred.
