Well you shouldn't make huge assumptions based on ONE person's opinion (remember, opinion is not fact...) from ONE college of about 39 undergrad colleges in Oxford.
I went to Oxford, and I went to state primary and secondary school. I received no extra Oxbridge prep tutoring, and no extra exam tutoring. My college had a good mix of state/private students - and to top it off, a good mix of northerners, southerners, Scots, Welsh, Irish and international students.
Yes plenty of people work hard who don't get in, but this is simply down to LIMITED PLACES. Quite logical really.... particularly when so many students get 4 As at A level these days. Oxford cannot possibly admit every student with straight As.
Perhaps your sister needs to make some more friends, and maybe then she'll have a more realistic view on Oxford as a whole. (And I only left Oxford in 2007, so I like to think I have a fairly recent experience too)