Yes she will earn miles because she has bought a revenue ticket using the UR points as cash. This is a better bet that redeeming via UA as 40K +fees since it's fewer miles/points and she earns miles as well. Probably the best use of UR points in this case would have been transferring to BA and redeeming on AA (assuming you can find availability at saver level) for 25K round trip plus fees. Hope this helps!