Do you think she really knows exactly how much detail you can see? I think your reaction is understandable. You just need to tell her what your friend are doing and why.
Tell her you are uncomfortable knowing that much intimate detail about her life and you too emotinally involved with this case - she is your friend first and foremost and you want to support her not just view her as work case. Therefore you've handed it over to your colleague. Tell friend your colleague is the best person to handle this type of case and you will be ensuring your colleague does eveything in her power to help her.
So you will still be helping, so your friend shouldn't feel snubbed, but it gives you the degree of seperation you need for personal peace of mind.
I would pass it on to a collegue. I work for local authority and wouldn't be comfortable looking into private details etc of friend/relative. I know when it's come up for others they have explained and passed it on.
Also I wouldn't do it as it could lead to problems for you - anything irregular (and in situations where the answer isn't in black and white it's likely) then what would happen if there was comeback on you? It looks a bit dodgy to be doing stuff at that level for a friend or relative.
Also if you don't make a decision they like or don't agree with doing what they want to do what will happen to the friendship then? Especially if it is an emotive issue.
If I were in that situation, I don't think I would expect my friend to actually take on my case and get into the nitty-gritty of it. I think I would want her to 'use her influence', you know, let it be known that the case relates to a friend and to, well hurry it up or whatever.