。
She can't tell right from wrong.
Literal
She [topic-は] good thing [conjunctive-と] bad thing [possessive-の] distinction [subject-が] cannot-make.
見分けがつかない (みわけがつかない) is a set expression meaning 'cannot distinguish/tell apart.' 良いことと悪いこと uses と to join the two things being compared. 見分け is a compound noun from 見る ('to see') + 分ける ('to separate'), and つく here means 'to attach/form' — the ability to distinguish doesn't form.