My DD had performance anxiety about reading
Bingo.
I don't know for sure, of course, but as soon as I read that...
I bet that's why your DD has such advanced spelling and yet "can't" read.
There's a parallel with my DD's speech - she "couldn't" talk until 24 months, and yet she had a vast comprehended vocabulary and could hear just fine and made vocal sounds (laughter, crying, etc.). No tongue tie, anatomical or cognitive issues. Nope. Just... perfectionist. The first word she spoke to us came from behind the couch where we couldn't see her.
Maybe... could you try leaving your DD notes that she can read to herself? Somewhere where she can read them without being seen, and something really low pressure, but will "trick" her.
For example, you could write: "there's (favourite treat) in the kitchen if you want some." ...or something like that. Then see if she comes into the kitchen
