They should have told her in the letter why they refused her application, she should contact her job centre again & ask to make an appointment to discuss the decision that has been made with someone
This link has information on the residency requirement:
http://www.ggd12.dial.pipex.com/f46.htm
This link should lead to information on how to appeal the decision that's been made, it looks like her deadline to appeal will be up soon:
http://www.direct.gov.uk/en/MoneyTaxAndBenefit s/BenefitsTaxCreditsAndOtherSupport/BeginnersG uideToBenefits/DG_10013949