Your friend doesn't know what she is talking about. It originated in Ireland and Scotland and has nothing to do with burning bones of children. The feast of All Hallows (hallow = holy/saints) is the holy day commemorating all saints 1st November and it is followed by the feast of All Souls (the also rans if you will) on the 2nd November.
The Christian commemoration was superimposed on an existing, pre-Christian celebration called Samhain. Samhain was the end of the cattle herding year and the start of the winter when cattle were taken from pasture, normally about half way between the Autumn Equinox and the winter Solstice. Customs related to Samhain involved fires (but no burning of children [hhmm]) from which each household kindled its own winter fire, and mischief, cross dressing and general nocturnal mayhem in rural districts. The dead were believed to walk among the living at Samhain as time went on and the concept of the holiday developed, and the disguising was done for protection. Offerings of food were left out for the deceased ancestors and the fairies.
In Irish, Samhain is 'November', aka Mi na Samhna. Other pagan feasts are commemorated in Irish month names, Bealtaine (Beltane) is May and Lunasa (Lughnasa) is August.
Hallowe'en was exported to the New World with Irish and Scottish emigrants and since the 70s has been turned into a very tame version of the old rural British Isles and American customs. American style Hallowe'en has now found its way back to the British Isles. I remember reading in a local paper in the US area where I lived an article about Hallowe'en in the 50s and 60s, which was apparently a wild sort of night in the suburb, with lots of egging of houses, burning bags o'poop on doorsteps, etc.
In Mexican culture there is the Dia de los Muertos which has a similar theme. Some of the artwork is pretty spooky, with skeletons abounding.
You can see how what we have at the present is all a mish mash of what is recorded from the past. By the time America was being settled by Irish and Scottish immigrants the customs had changed quite a lot. Growing up in Dublin (70s/80s) we used to dress up and go around asking for apples and nuts, and then gather at the local bonfire (composed during preceding weeks of all sorts of old planks and bits of wood donated from all over the neighbourhood). It has since then morphed into a trick or treat extravaganza, with fireworks, etc.