That looks like what you'd see when the camera's main CCD (the imaging sensor) begins to fail.
Just for giggles, try a different set of batteries in it (high capacity NiMH AA Batteries are a good bet for that type of camera), as voltage problems can sometimes cause odd issues.
I'd also try resetting the cameras settings back to factory defaults (you should find a choice to do that in your Setup menus somewhere).
But, chances are, you've got an electronic component failing (and your images look just like what you tend to see when a CCD begins to fail). I also don't see any recall on that model for known sensor defects. So, she'll probably need a new camera.