I agree with all the above..Just call her and tell her you are afraid you'll ruin it if you try it on your machine due to it's condition. And since she has sold it to someone you don't want to take the responsibility and give her information re: finishing or places that do it.

since you are "teaching" her, teach her how to iron it and cut all the threads, she should appreciate the learning exp.

First I would NOT consider her as a "friend" I would give it back and just say you cant do it. Sounds like the small amount of money you would be getting in the end isnt worth all the work and frustration....

I also think you made a good decision.

Give it back. It sounds as though this situation can only get worse. I would point out all of the places where the quilt doesn't meet and suggest that no one will buy a quilt in this condition. She'll be huffy and puffy and you'll feel the weight flying off your shoulders. Give it back.

I would explain that I wouldn't be true to myself if I quilted it in the condition that it is in. That should do it!

Chutzpah of the first order!
I agree with Murphy and Merry. Either would be what I'd do; and I actually lean more to recommending a LAQ to her.

If you have trouble talking to her or getting her to listen, write a note and pin it to the quilt. Be gentle but firm when you give it back to her and tell her it is not ready for quilting. If she gets mad, maybe she will take it to someone else. :-)

I agree with this suggestion.

"I can't. There are too many things happening right now." End of conversation.

I agree. If she's truly interested in learning all about quilting, then the clipping of threads and pressing the seams is all part of that process. If you do that work for her, she'll never learn. When you give her the final bill, you should include the cost of the fabric from your stash.