Similar store with me, except I was 4 months into a layoff when I took a 6 month contract-to-hire position. They made me permanent after about 3 weeks (it is amazing how easy it is to impress an employer when you've had a 4 month forced vacation), and been there 8 years. Never would have applied if I had been working full time somewhere else though.
In her case she was on an educational visa (with employment rights ) at the time of the contract to hire.
She had sought employment for months after completing her degree so was really not in the best position to negotiate.