A couple thoughts.
Get some treatment for your test anxiety. Go see a psychologist/counselor that will assist you with this and then go back to school and see if you can re-negotiate a retake. You may have to work through legal channels, too.
However, folks, now I will talk as a practicing nurse. Schools
of nursing are charged with the OBLIGATION to admit people to the profession that can complete the program. They have to have some objective standards. This is what you want when your family is in the hospital. "Test anxiety" in the work place can be psychological paralysis in a crisis or becoming overwhelmed with info when you face new meds that you will be administering to real live helpless people. So learning to cope with this problem is going to be a real life component of this person's education and she will have to legitimately show some resolution.
To only respond to this situation in the context of "That mean old school," is to miss an important point. Schools are gatekeepers to the profession. Now it sounds like she has had a lot of other success in school and there is room for negotiation. But my bottom line advice is that she get some coping skills for this test anxiety and then negotiate a second chance.
Good luck to all...