Furniture, so sorry to hear about your friend. She and her daughter are lucky to have you.
The best advice I can give you is to make the most of this time that your friend has left, which it sounds like you are already doing, ie. video tapes, etc.
As to what you tell the little girl as far as "where is Mummy?". Have you spoken to your friend about that? What does she want you to tell the child? Does she believe in heaven? (and if so, do you? Would you be able to tell her honestly her mummy is in heaven?)
The little girl will show her grief in many different ways, and you'll never know when. When she's acting up, is it because she's just a normal child, or is it because she misses her mum? Don't let her get away with murder, set firm guidlines, but be sensitive.
My husband died on our daughter's 2nd birthday, so I have been through a lot of this with her. As she gets older her understanding of what happened to Daddy changes, and her questions change. Her sister wasn't even born yet when her daddy died (she just turned 2), so I know it's going to be a whole other set of questions with her when the time comes. I know it won't be long before she realises there's something missing in her life and I'm trying to enjoy her innocence while it lasts.
You sound like a wonderful friend. I'm sure your friend and her husband appreciate you more than you'll ever know.