You make no mention of seeing a doctor, trainer or any health professional. Did you get a diagnosis of the condition, what caused it and a treatment plan? Are you sure there are no underlying problems that she may aggravate if she continues "doing what she's doing"? All of this will tell you several things - if it's truly serious, how to aggressively treat it and roughly how long it should take to heal and get her back up to snuff.
I believe in being 100% honest with any coach at tryouts. Anything less, and it may come back to haunt your DD when she least expects it. So what? She's only 12 years old! She has PLENTY of time to get healthy without risking making this a career long injury, or possibly a career ending one. My DD missed nearly her whole junior season as a pitcher in high school from a leg nerve injury while sliding. Most people realize that a kid's junior year is probably the most crucial in college recruiting. Long story short - she was awarded a handsome athletic scholarship and pitched 4 years at the DI level. She's now a healthy gal with no problems whatsoever.
Scooter7 has good advice to follow for tryouts. Coaches worth your trust will understand, because they will be interested in your DD's well being.
Sometimes you just have to go with your gut instinct. When it comes to your kid's health, remove sports from the picture. Consider her health WITHOUT clouding your vision with the element of sports. Softball is temporary, her health and well being is forever.