Some kids learn differently. And memorising is a completely fine way to learn to read. With DD who I will say was exactly the same I used to get stressed with. Frustrated because she would guess the words and use the pictures. But that's normal! And I can promise you it won't affect her overall reading long term. DD is now well above her age for reading and LOVES reading. She was the same with maths. She needed to memorise her basic additions and subtraction in order to use them then have that epiphany of how it works. What makes them stressed is feeling they don't get it. That they somehow should and don't. Patience is the best gift you can give her. With regards to distraction my DS is like this and only now is starting to find concentration in the classroom easier. Having something in his hand helped him because he is a fidgeted. And even when reading he would practically be climbing all over the place or hopping or something else.

How old is your DD?