Last year, I was able to claim my domestic partner as a dependent since we live together, she did not work and, therefore, I provided more than 1/2 her income and she didn't bring any money in at all.

I think if I remember correctly her income limit to be able to claim her as a dependent again this year is 3400, is that right?

If so, she made about $120 more than that... does that screw me out of claiming her as a dependent? I provided more than 1/2 her living expenses, we lived together, same as last year... is such a small amount over going to be a problem?

Yes, the income limit for 2007 is $3,400.

Yep, if her W-2 shows $3,520, then you CANNOT legally claim her as a dependent, so, yes, you're screwed!