Talk to a lawyer. Statute of Frauds requires certain contracts to be evidenced by a signed writing. Uniform Commercial Code has statute of frauds provision for transfer of goods over $500. Although that may not apply becuase the issue is the loan, not the car transfer. Loan term is probably for longer than a year which is a usual trigger for Statute of Frauds, but if there are no prepayment penalties, then it could be performed in under a year and may not count for SOF in some jurisdictions. Even if SOF does count there are usually a lot of exceptions.
ETA: loan term and prepayment penatlties probably don't matter. Fact is the contract could be performed in under a year so SOF may not apply. At least not under that prong. I can't remember the other prongs, transfer of real estate obviously doesn't apply.
Starting Score: ~500 (12/01/2008)
Meka, he is correct in the fact that is hard to respond because you have only given us a small sample of the information. I would be interested in what documents she signed and how his name was included in the first place. No car dealership is going to allow for someone to include a co-signer without the co-signer present to a) authorize his/her credit to be pulled and b) sign the contract that will bind him/her to the purchase and the financing. Not only would no car dealership allow this, neither would a lender allow someone to be placed onto a note without their signature on the promissory note. If your friend somehow managed to include a co-signer without his consent, it would be fraud.