Two observations relative to perception and price:
- New steel is trendy, niche and hence expensive.
- Old steel is less trendy, old hat and often dirt cheap.
I hear what you're saying about used, but if she can get over this and is prepared to compromise on component modernity (such as downtube shifters or 3-speed geared hubs) she could get something old, characterful and really capable for under a couple of hundred quid.
If going new tbh I don't think the budget is going to stretch to a whole lot in steel.
The third option would be something used but relatively recent; as others have said Genesis make some nice steel bikes; my choice being the Croix De Fer. Prices of old examples of this bike are somewhat all over the place currently and small ones seem to take more of a price hit. Obviously not sure of her size but
this caught my eye recently - reckon it'll go for ballpark £400.
Personally given the inflated, supply-restricted new market (and expectation that the used market will be awash with cheap bikes in coming months) I'd struggle to justify a new purchase at the moment tbh.