We realised that the requirements says she must have sat the test 2 years prior to application - does this mean the application will be refused and we would need to re-apply?

She hasn't done the biometrics yet, we're just at the very early stage.
Find an approved test
For your results to be accepted, your test must:
be on the list of approved English language tests
have been sat at an approved test location
have been awarded in the two years before the date of your application