But why is she incorrect? Is it because the verb to be is in its base form?
Perhaps they object to the use of the subject pronoun "she" after any form of the verb "be". It's certainly normal to say "It's me" when somebody asks who is knocking at the door. "It is I" is pretty stiff and unusual in American English.
People do sometimes say "This is she" on the phone, but I'd say that most sentences sound more natural if you use the object pronoun after the verb "be". I think this is true whether the verb is conjugated or in its base form:
Who is there? It's him. (The guy we were waiting for)
It is he???
(Grammatically possible, I suppose, but odd and stiff).