We could use some prayers here

Tim T,
This could be the beginning of a special time in your life. You have done the best you can at raising a child and instilling values as best as you can. But... things happen. Don't consider it a mistake, things happen for a reason. What you will get out of this is a grandchild. Believe me it will be worth it.
I have walked in your shoes. Not at the age of sixteen, but with two daughters being pregnant, at the age of eighteen and out of wedlock. Regardless, I have a total of five grandchildren, that I wouldn't change a thing for. They each hold a special place in my heart, and just like with a child, the first time they look up at you or grab your finger...you at that point are at their mercy. And it a good thing. All emotions you are feeling right now will pass.
Another thought to consider is the fact that you have your duaghter. Never fail to let her know how much you love her. We adopted a daughter that my wife had raised since she was nine months old. At the age of sixteen, she was diagnosed with ovarian cancer. We supported her and watched her fight this with dignity and at the age of 21, was given a clear, cancer free bill of health. Three months later, after a few problems and test, she was diagnosed with ALS and we lost her six months later.
That said, I hope you and your wife pass through this rough time with great speed, and enter into what a special time in your and your daughters life this can be.
Prayers sent and God Bless each of you.