I think you hit the nail on the head. Probably has an inferiority complex along with that so the lies makes her feel important.
We have the same situation with one of the neighbours except it's a "he". The whoppers get bigger and bigger each time he relates a story. We just let him talk and get it out of his system , it does make us laugh sometimes. The funniest part is that if his wife is with the rest of us and he starts she just glares at him and tells him to get his story straight and stop lying....lol. And he actually does stop and gets back to normal.
If you value the friendship just ignore the lies, or you could try and trip her up once in a while so she recognizes the fact that you are on to her .







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