My wife's Schedule C is linked to non-existent W-2.

You might have to contact Support.

How do I contact TurboTax? (intuit.com)

Delete the W-2 and use the option to type it in yourself.  Make sure you do not check the statutory employee box.

Perhaps I was not clear. There is no W-2 ! Non existent. 

I finally did delete the Schedule C and then after laboriously retyping manually the whole thing, it resaved without the "Statutory Employee" issue resurfacing.

That is really strange.  I am glad you were able to fix it and sorry for all your trouble.