Every time I try to set up my daughters Apple Watch this comes up

So when you hit OK it starts to set up?

If not then double-check the spec of the Watch.

If it still checks out then

First force restart it

i.e. press and hold both the side button and Digital Crown for at least 10 seconds, then release both buttons when you see the Apple logo.

Then Force Restart the paired iphone   Force restart iPhone – Apple Support (UK)

You may also want to make sure the software on the watch really is up to date.

Update your Apple Watch

If you've completed that troubleshooting and the issue is still not resolved, Contact Support.

Click here > Contact - Official Apple Support

or phone numbers 

Click here > Contact Apple for support and service - Apple Support

Are you saying that the Watch complies with all those requirements?