Indian Overstayer on a Spouse Visa

My friend is Indian Female overstayer on a Spouse Visa, it has now been 2 years since her visa ran out and in April 2007 the home office came and raided her house and took her passport away and asked her serveral questions and she has a child to a British Citizen and advised her that if it was not for the sake of the child they would have put her on a plane and sent her back to India and they said she has to sign in at the Police Station every week this has.been going on for 1 year now and in thos time has been collecting data I.e. Family photos and bills with her name on it, but she does not have any proof of living togther for the first 3 years of the marriage she only started collection the data once she was caught and plus her husband has a criminal record, does this affect her application, and regards to her current situation what she wants to know is what is going on and what is likely to be the end result will she be asked to leave the country or will she be granted an in house application for 2 years, plse