http://www.emblibrary.com/EL/default.aspx
http://www.designsbyjuju.com/
these are 2 of my favorite sites to get designs from .. there are many other places but I love how these stitch out.
If you go over and help her when she does the towels, (it takes a lot of time to get the stabilizer off the backs of towels), supply the towels and offer to pay for the designs (or buy them and download them to a flash drive for her to have ... be sure you get the "correct" type of design) along with a token amount per towel she might appreciate the company. You could also take a homemade dinner casserole or something for her for the day she does the work so that is one less thing she has to worry about.
If you were to buy the embroidered towels outright at a store, how much would you be willing to pay for them? use that as a guide as to what to offer her.
Then again, she may be wanting to use the machine but may not have the "blanks" to use. Do be aware that sometimes accidents happen and the towel could get "eaten" by the machine through no fault of hers, be sure to have a couple extra so there's no hard feelings. You can always leave them with her also.