As much as I don't like to disagree with red, I have to interject here.
It can be a red flag, if you were simply a bad candidate. However, if you just got unlucky for whatever reason (limiting yourself geographically, couple's match, some asshat writing you a bad letter), then you can turn it all around. The important thing about having done a year of training is that the hardest part of intern year for them to teach you you've already done. You know how to be a doctor, and what hours you have to work.
I can't tell you how many times on the interview trail people point blank asked me "how did you not match if you look this good on paper?" Usually this was at the end of the interview when they had figured out that I wasn't a complete tool at the interview process. So be prepared to have a good answer.
Also, if you can have someone proofread your letters and tell you which ones you should and shouldn't use (since technically they aren't allowed to tell you what is in them) it can help you.
I would argue that it is a lot easier for her to transfer near you, as there are more FM slots than EM, and they're less competitive. That doesn't mean her program will let her transfer, but remember, you're spending a year apart already. She'll be done in 2. Another 2 years apart is hard, but is it worth the strife that is "I'm not doing what I wanted to do because I was near you?"