Some further advice, now I have the time. Long post coming up, but please do cut & paste & show this to your DD. It's basically how I'd work face to face with such a dilemma.
Your daughter needs to take a deep breath and be a grown up, for just an hour at a time.
By this I mean that yes, these crises of confidence hit us all (even old lags like me). But part of becoming "independent learners" is that we have to learn how to deal with such crises. Not just crumple. We have to learn to give ourselves a break, and go easy & just sit with the emotion. Not turn it into a huge drama. This is really really hard to learn how to do, but it is the basis of resilience, which is so important.
There is help, and she should seek it. But she should also take steps to learn how to deal with such situations herself.
The problem at the moment is that she's in "all or nothing" thinking. To be really tough, this is an easy get out, frankly. I see it a lot: "Oh I'm stupid. I can't do this." -- it's a quick way out of dealing with a difficult situation, and a typically socialised female way of dealing with it.
But while it's understandable - we all do it to a certain extent, I'm sure! - then you take a deep breath and you start to take the small steps that are necessary to complete a large-scale piece of work, starting from scratch.
Doing it all in one go might work for an essay, where the essay question is written for her, and the content is described by the course/module, and there's a reading list & so on.
A dissertation is different. It's often longer than the essay length students are used to (but not always). However, the main challenge of a dissertation is that it's the student herself who develops the question or topic, defines the field, pulls together a schedule of reading & research.
So she needs to start with small steps: doing some reading around her broad topic. Then she needs to think about a coupe of questions which interest her. Without going "Oh, I'm too stupid, I can't do this" -- she just needs a couple of ideas. Get her to think about why she's doing the course in the first place. Or what's a question about the field she's studying that has niggled her for the last 2 years? Something. Anything.
Then she needs to get into her library and browse the bookshelves in that area, and start reading.
Then she needs to brainstorm a couple of pages. I set a creative writing exercise called "free writing" students write (I get them to do it in class because I am evil
) for 5 minutes without stopping. Without editing, without judging themselves. I get them started on a sentence such as "In my thesis I will argue that ..." Here's a Wikipedia link, but don't tell my students I've linked to wikipedia--
en.wikipedia.org/wiki/Free_writing
She really needs to break the task down, bit by bit. And take small steps, step by step, and tell herself that each time she writes, "It's just a draft" she can rewrite. You can edit bad writing, you can't edit a blank page. She just needs to do anything, something, that will get her one tiny step closer to the final goal.
And she needs to "man up" about it but maybe just for an hour a day. The other 23 hours she can believe this "all or nothing" wrong-- thinking. But for one hour each day, she's going to help herself achieve what she really wants to achieve: at the end of a week, that's 7 hours of work towards her dissertation, and that's almost a whole working day.
On this principle she could also do a plan for herself, working backwards from the hand in date, and how many words. So a dissertation due, say 1 May, of 10,000 words, there are now 5 months to go. That's:
2,000 words a month;
500 words a week;
100 words a day.
But you do all this with a tutor or a supervisor, and that's the bit that's missing at the moment: your DD needs to find out the arrangements for this.
This is tough love & why my students pass!