I'm afraid you come across as far more concerned with your neighbors fate, the noise and dodgy occupancy issue, and how she handles being bullied, than the issues for the children behind it.
Possibly because she's talking to you about her fears and the impact of what's going on, all the time. So it's become about her safety and stress rather than the children? It seems like you want to solve that problem and manage her and are frustrated that she isn't in agreement with how.
I might be being very unfair, because you obviously care about your friend, but If it's coming over that way here, then consider how it's coming across in r/l?
They are blaming her regardless.
They've not said a single word to anyone else and I think it's because they see her as being the easiest target to blame.
It doesn't make any difference once the decision on who's to blame has been made. These sort of people have a system of 'rules' and decision making processes about how others should respond to their lifestyles. They never see themselves and their behavior as responsible for what happens to them, there has to be someone 'out to get them' who's causing it all.
You're accidentally victim blaming because you think they'd be less confrontational to her if she showed some disapproval, but it's too late and even if she'd done it earlier it isn't automatic. The most vulnerable person nearest to them that they don't like, will usually be the primary target.
If she distances or cuts them off, to them that's absolute proof to them that she's 'grassed' them 'up'. (it is 'up' intentionally)
If she stays friendly enough it may be considered proof by them that she's a 'back stabber' but it will generally leave them guessing and still looking around for other targets that have 'snitched' on them. Her safety is improved by them being less certain, not by a well meaning neighbor insisting she has "her back 100%" while doing little other than listening and trying to direct her behavior.
She probably knows that mostly what's going to happen here is action is taken to make him become a legal rent paying sub-tenant, and they are given a social worker to supervise their learning curve to keep the abuse at home to below removal level, and the noise from it to just below eviction level.
Obviously the landlord isn't the appropriate place to report child abuse to if you actually wanted proper child protection action , rather than tenancy issues and him being made to legalize and pay rent and agree to keep the noise down, or her to be told to make him leave.
HA will just delay action being taken while they try to help her 'sustain her tenancy' (= get the rent paid, and any complaints reduced)
But from what other pp's are saying you already know this.
Read and re-read and act upon Sparticuscaticus's spot on post if you genuinely want to help the children.