Whether you check yes or no does not affect your renewal. So, the real question is, would checking no be falsification. The question in Area IV is "HAVE YOU FAILED A TEST FOR THIS CERTIFICATE OR RATING?" Turning to the instructions for guidance yields only the statement of "Check appropriate block." A search through both FAA Order 8900.1 and 8900.2 only amplify to say that if the block is checked yes, then the examiner must ensure the applicant meets any additional requirements (such as an endorsement if within 30 or 60 days). Interestingly enough, FAA Order 8900.1 even references the old FAA Form 8710-1 in its instructions, which had different wording and said "Have you failed a test for this certificate or rating within the last 30 days?" A totally different question, but which was probably (I'm just guessing) changed to cover the 60 day implications as well as the 30 day implication).
So, no matter how poorly written, no matter what the intention was, no matter how it got to say what it does, the question is have you failed a test for this certificate or rating? I don't see an extension to the question that says anything about the question not counting if it is a renewal. I certainly would not take the fact that someone before me did it and no ill befell them. We all know of events contrary to the rules that were never enforced.
There is no down side to checking yes. The fact you failed the CFI test the first time is already permanently documented in your file. You are going to get your CFI renewed no matter what. On the other hand, is there a chance checking no will be interpreted as a violation of 14 CFR 61.59(a)(1). Maybe. How much? I don't know. It depends on the situation and the people involved.
So, you have a choice between checking yes, which will carry no risk and checking no, which carries some degree of risk. I know which choice I would make.