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While I won't comment on the chances of her visa being refused, keep in mind that because the extension was not applied on or before the date of the previous visa expiry, she is currently an overstayer AND that her counter for acquiring ILR via the spousal route is reset to zero. So her five year journey towards ILR will restart when she is next issued a spousal visa.
The IHS only covers the period after the subsequent visa has been issued (so if the visa is refused or withdrawn, for example, the IHS is refunded).