K., I faced the exact same thing 20 months ago (at 37) when my 2nd son was born, and my boys are also 17.5 months apart. We originally intended them to share a room within a month or two (our first son left the bassinet in our room and went to his crib at about 4-5 weeks). However, we quickly realized that would be a mistake if we wanted our older son (or the rest of us) to sleep through the night. As it was, the simple fact of having a new baby in the house threw him off his routines and he stopped sleeping through the night consistently (and that lasted for several months, then they both began to slept thru the night but in separate rooms). We wound up keeping #2 in our room in a bassinet for the first 6 months (I was nursing so it was more convenient for me anyway). Then we moved him into his big brother's room (and into a crib) at 6 months (just as #1 turned two). That setup didn't work because #1 kept climbing up into the crib, landing too close to comfort or even on the baby, because he was excited to share a room and wanted to play. (Our cribs can't use crib tents, or that would've solved our problem--I highly recommend using one for the baby if you do have them share a room, for this exact reason). So that lasted about a week and we ultimately moved just the crib into our guest room (took down a twin bed to do it). That worked great for a year, then we moved #2 back into big brother's room this past Thanksgiving. Despite the fact my then 17-month old and almost 3y.o. both occasionally awaken at night and cry, neither has EVER woken the other one up!
But back to your immediate concern... your daughter likely WILL wake up when the baby cries if they're sharing a room, light sleeper or no, simply because it will be so different to share a room, let alone with a person she's just coming to know. She may even wake up just hearing the baby in your room. But she could also become accustomed to it after just a few weeks. Which admittedly can seem like MONTHS when you're caring for a toddler and a newborn, I know.
My own experience leads me to suggest that if you can afford the space for #2 to have a separate room when it's time to move out of yours--even if it's just enough space for the crib and nothing else--then do whatever it takes to move stuff around. And you may find that's a great opportunity to do some decluttering and purging (we sure did). Let your daughter get used to the new family member and to do a little more growing up before asking her to share her room. So much of her life will turn upside down, and she'll only understand it on certain levels for the first several months, but that will change as she approaches her 2nd birthday. We found that milestone and the approach of Christmas & cold weather were helpful in explaining why the boys would begin sharing a room. Good luck, whatever you decide. And remember, no matter what you do decide, you need to be flexible and see how it plays out. Do not be afraid to say one day, "This isn't working," and to make whatever change you think will work. Life is all about starting over, new chances, and most of all, CHANGE! Good luck!