I'm going to look at this from a little bit of a different direction - rather than focusing on the reading level, I'm curious about her writing.
Compared to her friends in her classroom she is a horrible writer. I have seen it myself. But at this stage in her development, she is not able to provide full analysis to the teacher's liking (and on the level of her friends) in order for the teacher to allow her to read at a higher level (even though they all read the same high level of books outside of school). DD is not a writer. And when she writes, she is a slow writer as well.
It sounds like they are working on analysis of text rather than just reading comprehension in the reading groups in this class, and the students are expected to illustrate their knowledge through writing. If the challenge with writing is limited to handwriting ability, I'd request that your dd be allowed to keyboard and then see if there is an improvement noted by the teacher, and if so, allow her to move up to a group that's an overall better fit. OTOH, if the challenge is with getting her thoughts out in writing (expression, not handwriting), then I'd listen and think through the teacher's point of view on her placement. It's quite possible she's placed where she needs to be based on writing - and that *might* be an appropriate way to place her based on what the classroom/curriculum goal is.
in class was placed in the lowest reading group with a text several hundred Lexile below her NWEA assessed level because of "writing issues".
Even though she's in the "lowest" group in the classroom, she's in a gifted classroom (I think). I'd try not to think of "lowest" as horribly low, it's just a lower group relative to a classroom full of high ability students.
She is in a group with children who are barely fluent in English and most of the time is spent decoding text for them and explaining basic grammar.
I have a tough time making sense of this, given the DRA level of "See You Later Gladiator". I would definitely want to observe and see if this is true - if it is, then you need to advocate for a change for your dd. I'd be careful about one thing though - it's possible that the ESL students (English as Second Language) may need to ask some questions for clarification of words or grammar - but at the same time they might be able to fully comprehend and provide analysis at the same level as your dd is. I'd try to avoid focusing on the ESL kids unless you observe and see the entire reading discussion is spent on low-level help. If it's just asking a question here or there about a word meaning, I'd try to help my dd see it in a positive light - the teacher is helping those students access their curriculum. Not knowing an English word doesn't necessarily mean they are at a lower-level reading ability. This is in some ways, exactly what you are hoping the teacher will do for your dd - not hold her back in her reading group because of her challenges with expressing herself in writing.
She feels she is learning nothing in the group and it's basically a repeat of work done in earlier grades.
I'd talk to the teacher to clarify what the learning objective really is, and then share that with your dd and between the two of you talk through how your dd thinks she's already mastered that objective, what work can she show that illustrates mastery etc. Then have a conversation between the three of you (you, dd, teacher) to discuss whether or not it's really all a repeat for dd and should she move up.
Why should one's reading level be dependent upon writing skill? MAP does not test for this correlation.
Reading and writing are going to become more and more intertwined as your child progresses in school. Although they may seem like two totally unrelated skills, they are, in fact closely integrated throughout many subjects in school. Not just language arts, but science, social studies, etc - students are asked to listen to lectures, watch videos, read books/etc and then relate what they understand and what they've learned through writing. If your dd has a relative weakness in written expression this is a *really* good time in her school career to be working on it - and that might mean focusing on text that is easier than she is capable of reading in order to simplify the writing process to the level she's working at. Throwing her into an advanced reading group where she can't keep up with the writing isn't going to help develop her writing skills. OTOH, she is also not going to (in real life) lose any of her word decoding skills etc - so she's not going to be moving backwards in the level of books she's capable of reading for pleasure. What I've seen with my children (irregardless of level of giftedness, and once they are past the basic step of learning how to recognize letters/words), is that reading makes them better readers - as long as they are reading they are improving their skills. So if she's reading lower level books during class, but she's still reading challenging books for fun, she's going to progress.
Her teacher insists that DD's lower writing skills will not allow her to participate in the higher reading groups in a meaningful way. She refers to the students in the higher group as being able to complete the work at a "faster pace" than my DD could.
Since this is what your teacher has observed, rather than approaching this in a confrontational way and pushing for the higher level reading group, I'd ask the teachers for specific ways you can help work with your dd to improve her writing skills. Ask what her goals are re writing, and what will enable your dd to catch up enough to be moved to the upper level reading groups.
DD has stated that she feels she is not "ready" to write. I feel this as well. She can hobble along but she generally detests writing. I feel it will take her some time to develop just as her father (he did not write well until 7th grade).
I'd probably delve into this more with dd - why doesn't she feel "ready" to write? Do you have any ideas what's holding her back? Have you tried letting her keyboard and does that make writing easier for her? Is she able to answer questions verbally that she can't with writing? I might ask the teacher to have your dd give oral responses rather than written in her reading group for a few class periods just to see if her answers are noticeably more in-depth and improved. I really do think this is an important piece of data - it will help you understand if it's handwriting that's holding her back or if it's how to organize thoughts/etc relative to the types of questions being asked about the books. If it's handwriting, give her a keyboard and request that she be moved up. If it's organizing/generating thoughts etc - work on that and leave her where she is for now until you see she's truly ready to move up.
Best wishes,
polarbear