When you get an estimate for car repairs, it's just that - an estimate. They can't go over the estimate you approve without your consent, but they can inform you that the repairs will cost more when they detect additional problems.
Diagnostic fees, which can be substantial depending upon the type of problems your car has, are generally nonrefundable. If you agreed to pay $800 for a diagnostic fee (e.g., for a repair which required pulling the engine or other serious time and effort before a diagnosis could be made), I would be extremely surprised if you did not agree that it was a nonrefundable fee. But I haven't seen any contract or agreement you or your wife signed in relation to that fee.
I doubt that the car is still sitting at the dealership. What happened to it?

