My daughter of age (removed) and is a very pious young girl. Observed hijab and has never missed any of her wajibaat. She is acutely aware of Allah (swt)
She is starting develop her sexuality. It is confusing her to the point of making her feel she is “bad”. She told me that she wishes there was a way she could “communicate” with Allah and figure out how to stop it. She is withdrawing from hugging her friends or even me because she is afraid it might not be right.
I have tried explain to her that it normal to get these feeling due to hormonal changes and explained to her the difference between healthy/halal touch and touch that is not halal. Can you please help me how I can explain it better through Islamic perspective. Islamic perspective is the only that she feels comfortable with. I am afraid she might be headed towards depression and it is really worrying me and making me feel helpless. Your help will be greatly appreciated.

It seems like your daughter is in a state of confusion and needs help before things could get worse. Shaitan gets to youth who are pure hearted and practice their faith like your daughter is.
Now that you've tried to explain her and she is still confused, try showing her the right books to read and find out for herself. There are many books available on line specially in like fiqhi laws for youth or exclusively for women and men etc. You can search and show her what books she can be enlightened with and then suggest that you discuss between yourselves. If you know of a good practicing lady in your community, try involving her also in the discussion without making it sound that you are nagging or advising your daughter too much.
Young people often like to discover things for themselves and then do they feel satisfied.
Inshallah with time you will see the change and of course with praying to Allah alongside.