BE saves files in many of the folders throughout App_Data. This is why it's necessary to grant the ASPNET account (or Network Services account, etc), Write access to the entire App_Data folder.
For images in particular, when you click the Browse button, select the image, and then click the Upload button, at that moment is when the image will get saved to the App_Data\files folder. It actually gets saved into a sub-folder from there based
on the current year and month. We're in January 2010 now, so the folder the image would get saved into would be App_Data\files\2010\1. Next month, it'll be App_Data\files\2010\2. BE will create these folders as needed.
BE also saves data in all the other files and sub-folders in App_Data.
You can try uploading an image to see if it gets saved in that folder. You can also try saving the Settings in the control panel. The settings.xml file in the App_Data folder should get updated. These are just a couple of things you can
If your webhost cannot give Write permissions to the App_Data folder (which of course these is no reason why they shouldn't), you could have her upload images to remote image storage services (e.g. flickr) and then reference those remote images from her
posts. But this is not a "real" solution since storing images in App_Data is just one of the less important pieces of functionality needed for BE to be able to run. BE also needs to be able to save Posts, Settings, and other pieces of
data in App_Data too.