I think the Word Wall is an excellent idea! My ds (he *was* an early reader) started with sight words. It can be a great motivator to keep reading if you don't have to sound out every single time -- and it sounds like that method just isn't clicking with your dd. I don't think sounding out would have worked for my ds.
I don't have much experience with teaching/learning to read, but it seems like sounding out would be like trying to ride a bike in slow motion -- how are you meant to follow along if it takes so long to get the whole word out?
Have you tried a list of high frequency words out of context, just two or three a day, and adding to that? Might boost her confidence. Have her sound the two or three words out, then have her go back to them 5 minutes later and see if she remembers the words based on the *look* of the word. And then do it again 10 minutes later, and a few times through the night. Sure, it's memorization, but heck -- I don't sound a word out every time I read it! And then go back to those two or three words the next day, and add a few more.
And then ... on the word wall! My ds had a "word book" -- same idea, different format -- when he was learning to read; he loved to add words he knew, and we'd add words we thought he *could* know.
So yeah -- since the phonics method isn't working for her, I'd go with something else, starting with sight words, and focus more on the look of the word than the sound the letters make.
Good luck!
