My computer has now seen the error of it's ways and is working beautifully (thanks for emailing though!).

My feelings are much the same as everyone else's. This dogs problems are going to escalate. It will become more and more destructive and harder to control the longer it is left in that situation.
To put it bluntly the dog is being seriously neglected and I feel you should point out to your friend (in a much kinder and more sensitive way than I am!!!!) that this is a form of abuse. It is unfair and, although very hard when she probably thinks the world of the dog, she should allow the dog to go to a home where it can reach it's potential rather than become a serious problem. It would also ease her guilt and stress about the dog.