Yes, I would be worried, and it is understandable that you are concerned about your daughter.
Given that your daughter is 16 and just finishing 8th grade, I imagine that she has been held back before. What did you notice about her academic progress when she was last held back? Did she have a good year or did she continuing to struggle?
As you consider grade retention for your daughter, there are a number of issues to keep in mind. First, you should learn all that you can about research examining the short- and long-term effects of grade retention. The National Association of School Psychologists (NASP) has published a position statement (which means that prominent members of the NASP got together, reviewed the evidence, and determined their official "position" on the issue) on grade retention. Dr. Jimerson at UCSB has also conducted a great deal of research in this area, and he has suggested that more comprehensive interventions should be considered rather than simply retaining a child. Overall, the research indicates that students who are held back/retained have worse outcomes academically and emotionally than their peers who were also candidates for retention, but who were promoted. For more on this, see links below.
It sounds like your daughter has significant learning difficulties. Has she been tested for special education? If not, then your next step is to request an evaluation from the school. You should write a letter to the school principal requesting that your daughter be evaluated for special education. Here is a sample letter: http://www.ldonline.org/article/14620. For more on the special education process: http://www.education.com/reference/article/Ref_How_School_District/. If your daughter has already been tested and is receiving special education, then I suggest that you recommend that the IEP team meet to discuss new accommodations and interventions because your daughter is still struggling.
L. Compian, Ph.D.