Zelda vs Sheik is a hella annoying matchup for us, for reasons that have already been stated - Sheik can run rings around us at close range, and camp us with Needles at long range.
Basically you need to try and stay outside of her grab range and inside of our FTilt range for as long as you possibly can. FSmashes, FTilts and jabs are needed to try and keep her out... but not too far out. If she does get in, DTilt is the least risky option, and if it hits you can get some momentum of your own going. Nayru's can work once in a blue moon if they're being predictable in their offense, but that option is really risky for obvious reasons.
As for what to do if she's at long range and camping with Needles and Grenades? Basically just walk towards her, maybe with the occasional short hop, shielding as and when necessary. Eventually she's going to run out of stage and have to start moving towards you. You'll probably take a few percent damage before you can get close to her, but that's kind of an inevitability in this match anyway...
If you land a grab, always go for UThrow (unless she's at 200% and BThrow will kill, I guess, but if she's at 200% and not dead that's a big problem in itself...) Her Dair is super risky, and her other escape option, Bouncing Fish, is similarly risky and easy to punish if baited - these set-ups are generally better than what you could get from her other throws. On a similar level, if you're going to try and edgeguard her, I recommend getting below her and trying Uair. At first glance, that seems counter-intuitive, but trying to edgeguard her the 'traditional' way is a bad idea - her aerials provide great protection due to their speed and range, so lightning kicks are a no-no. But when she's off-stage, she can't use Dair (since, you know, instant death if she does), and up B is very slow, so her only option to escape Uair beyond a baitable air dodge is... Bouncing Fish... which can be baited into a Uair. :D
Long story short, it's not totally unwinnable, but you do need to be much more precise than Sheik does in this match.