Selling things to friends is on my list of things to never do. The main thing here though is the fit. Fit is the most important part of buying a bike. So if she insists on buying the bike, explain the fit thing and go to some bike shops with her to find out what a correct size would be. Maybe if she gets on one and feels the difference she will understand. Then if she still wants to buy used, at least she will have a better idea what size to look for.

She has the bike now? I wouldnt worry bout the helmet thing once you sell the bike, but she is riding your bike with no helmet now. So what happens if she gets hurt on your bike? I ask that cause when I was a kid a friend got hurt on my bike and they collected from our homeowners insurance for the doctor bills. Sell her the bike or get it back.