[Sir Gawain]

In fact, if not taken in context of information not contained in the sentence, the word "her" could easily refer to a person other than Toni Morrison.

You could come to that conclusion even with the context clues, which is exactly why the sentence is incorrect.

[supercat]

You could come to that conclusion even with the context clues, which is exactly why the sentence is incorrect.

Consider the sentence: Bob polishes his shoes better than anyone else he knows. To whom do the words "his" and "he" refer?

What if the previous sentence was: "Joe enjoys visiting Bob's Shoe Shine Shop."?

In the PSAT sentence, Toni Morrison is an obvious possible referrent of the pronoun "her", just as Bob is an obvious possible referrent of "his" and "he". That an earlier sentence might have established a stronger pronoun 'binding' does not make the sentences ambiguous or incorrect.

[Willie Green]

which is exactly why the sentence is incorrect.

No. There are no rules in English grammar requiring that a single sentence eliminate any and all sources of potential ambiguity. If there were, there'd be no need for lawyers. The original sentence is correct as it was written.