Hi
Welcome to the MedHelp forum!
A bad odor coming from nose is usually due to a foreign body, sinusitis, nasal polyp or even due to post nasal drip. Usually treating the cause takes care of the smell. In a small kid the chances of a foreign body are very high. Often nose rings are a common source of infection and bad breath. It can also be due to diabetes (less likely but if other causes are ruled out, this should be looked into). Please consult an ENT for proper diagnosis and treatment.
Hope this helps. Take care!
Sounds like it might be infected & you should get her to doctor (if you haven't already) to ask if them prescribing antibiotic will help.