What does the entry of discharge in the case is withheld mean?

That is an odd expression I have not heard before. I am guess it means that the court is delaying the decision of whether or not to permit the discharge, meaning eliminating the debts.

Retaining a lawyer is almost always a good investment. If your wife received a discharge in her Ch. 7 case from two years ago, she is not eligible for a discharge in a case filed within 8 years of the filing of the earlier case. You would be eligible for a discharge, however, if you have not filed previously. So the Court is probably using 'withheld' to say that the discharge was not denied as such, merely that it is not granted. You could of course call the office of the Clerk of the Bankruptcy Court ask them what they mean.

Have an experienced BK lawyer look at your file with you. I think I know what it is, but I wouldn't hazard a guess without looking at your file.

You should consult with your attorney who filed your case. He/She can address this. If you filed yourself then I'm sorry this happened. Under the bankruptcy laws parties if you want a discharge you cannot file bankruptcy again for certain periods of time from their previous filing. Sounds like you wife previously filed a Bankruptcy and the new Bankruptcy was filed too early to allow for a discharge. If you don't have an attorney you should retain one so your Bankruptcy will be done properly.