Hi Hard,
She must be using a Frio pouch, but it sounds like she isn't following the manufacturers instructions. The pouch itself is a soft material that is filled with a gell substance. When wetted this becomes very cold - cold enough to keep insulin chilled but not frozen. Any excess moisture on the outside of the pouch is supposed to be dried dried with a towel or teatowel, and the the pouch goes inside an outer bag that comes with the pouch. The outer bag is breathable but won't let any moisture escape (I have kept mine in a jacket pocket all day with no leakage at all).
Unfortunately the whole thing comes from the manufacturers in a plastic bag. Although the manufacturers say once you have unpacked it, throw away the plastic bag and never store a wetted pouch in the plastic bag, many people do, presumably for fear that the outer bag will leak. It's only when you store the pouch in a plastic bag that it can get mouldy.
Unfortunately they are not washable so I suggest that she gets a new one and this time trust the manufacturer's instructions.