Hi there - I'm a professional children's author and I also teach and mentor children's writers. Children's Writers' and Artists' Yearbook is great when she has finished her story. It rather depends on the age range she is writing for - it's very different writing a picture book from writing a young adult novel - but one of the best is Write for Children, by Andrew Melrose, who set up the MA in Children's Writing at Winchester University. There's a new guide to writing for teenagers from A&C Black by Yvonne Coppard and Linda Newberry, called Writing Children's Fiction which I haven't looked at but I know both authors and they are very good, very competent professional children's authors.
There's also a lot of advice on blogs. Try 'Help! I need a publisher' - helpineedapublisher.blogspot.co.uk/ It's not still being added to, but there is a wealth of great information for the not-yet-published. My blog (www.stroppyauthor.com) is really for published writers, but there's quite a lot that's useful for the unpublished. Both these are specifically aimed at children's writers.
A friend of mine is starting to get into writing stories for older children but hasn't had any instruction in it. Her birthday is coming up and I'd love to buy her a book about improving her children's fiction writing, can anyone recommend one?