Our young family is unschooling, so my answer for a schooled child is probably not applicable, but here it is:
Give her time. Back off. Let her come to reading on her own. Whatever your thoughts on any delays, do not express them to her or let her see that you are thinking about it (and I don't think any parent can completely avoid thinking those thoughts). She could start seeing herself as delayed as well. This is something that homeschooling families (unschooled or more structured or whatever label we might choose) have the luxury of dealing with in a relaxed way. Every kid, mine and others I hear about, is ahead in some areas and behind in others. School, unfortunately, does not have the mechanisms to deal with much variation. That's my generous assessment. My not-so-generous assessment is that perfectly normal kids risk getting slapped with a "delayed" label that can follow them for a long time. School also has a carrot-and-stick approach to learning can derail kids' own motivation to learn these things.
I don't ramble on with opinions just to amuse myself. Somehow you need to let her discover that she wants to read. My 6.5yo daughter loved "secret code" puzzles that have riddles involved. The extra-nice thing about secret-code is that you get one letter at a time. DD usually reads by word recognition as is a bit hurried when she hits a word she needs to sound out, often missing whole syllables. Secret code slows her down. One "puzzle book" that is actually a workbook is "Big book of Word Puzzles". She chooses to work on these, will do 10 pages in a day, then none for a month.
She is also a big fan of graphic novels and comics, like the Garfield anthologies and Calvin and Hobbes and reading the comics daily. Her first book that she decided was worth the effort to read was the graphic novel "Perseus and Medusa" (we were getting into a "monsters phase" and Medusa was her favorite.) She also gets a kick out of baby board books. It helps that my 4.5yo DD2 always brings home an armload of those!
DD1 is a self-taught reader. We rarely followed the words because she hates that. And, true, that does turn what would be a pleasant experience into a lesson. If every story comes with a lesson, they might not want to read, schooled or homeschooled.
So, if you want her to see that reading can be pleasurable, then MAKE IT PLEASURABLE. Skip the finger under the words and the questions and read to her. Make up voices. Read a book with no pictures and have her illustrate while you read. Act it out if she's willing. HAVE FUN!
I just read a sweet article on a late-blooming reader in the January 2011 issue of Home Education Magazine entitled "Reading Lessons". HED often post articles in their entirety on their website, so check it out:
Good luck, and please read my post as a COMPLETELY BIASED answer to your question.