Age of graduation versus playing age group situations seem to occur often now. You must make sure that whatever information your club sends into the tournament hosts about your daughter (the team's roster), it correctly shows her year in school and that on any questionnaires she receives from collegiate programs, you highlight that she is one year 'older' in school than her club level. Until you make it plain as day that she is graduating as a 17 year old, coaches will assume she is just a 17 year old. They won't be shocked or discount that she is graduating one year earlier, you just need to communicate.
Another point of emphasis; development of skills. If she is going to be graduating as a 17 year old senior, then you need to move her up to her graduation age playing group and away from her actual age playing group.
For collegiate volleyball recruiting, she is really a 16 year old right now. As she will graduate as a 17 year old, and then be competing against collegiate players as a 17/18 year old, the needs to move up one age group in club volleyball for next year (if not sooner!!!). She needs to move up to the next level of speed in volleyball.
One of the biggest challenges I see for PSA's transitioning from Club to Collegiate Volleyball is the speed of the game. The collegiate game is always faster because the players are older, stronger, more mature and more experienced. Once a SA makes the adjustment to the speed of the game, they will be OK. Some freshman can do it in a week, while others may take a year to get used to this new level.
Your VolleyPSA is going to have to jump 2 years. It is enough of a challenge to go from 18's club to college, and 17's club to college is a huge jump. For an indication of this challenge, the next big tournament you are at, go watch the 17 open level play for a few matches. Then, immediately go watch a couple of 18's open matches. The speed difference is noticeable, the collegiate speed blows this away.
She is missing one complete year of club volleyball either way you look at it because of her graduation year. I believe it is better to miss the 16's year, instead of the 18's year. If you keep her at her current age group, she will miss the 18's year.