This application package is for Canadian citizens and permanent residents who wish to sponsor:
* a spouse, common-law or conjugal partner; or
* dependent children
The application will be processed for your child, a US citizen, through Buffalo. There is no inland application for a dependent child, unless they're accompanying a spousal applicant. I'm not entirely sure, but I think your child will be the principle applicant ($475) . . . someone can correct me if I'm wrong. I think the $150 accompanying dependent fee would be only if, for example, your wife was the principle applicant and the child an accompanying dependent.
Yes, she will need to undergo a medical exam, you will take the Appendix C form from the Region Specific forms to the DMP when she goes for the exam. Make sure the DMP knows that the application will not be processed within Canada, so he should give you a copy of the correct form to submit with the application as proof that the exam was done. The DMP will send the results to the Regional Medical Centre in Ottawa himself, and Buffalo will request them from the RMC when they're ready to review them.