Based on the information you provided, I do not recommend that she files either for an extension of B status OR an change of status to H. I do recommend that she instead files for an H-1B for consular processing and then applies for the H visa at her US consulate in India. Realizing that these consulates are quite difficult, the annotations in her passport mean that the officer in question felt that she may have improper intent to change or extend status upon entry. While I believe she is still legally able to do so, it could cause issues with DHS adjudication. Additionally, if the H is unsuccessful for some reason, then DHS may decide not to allow her further B entry.
Answered on Jan 19th, 2011 at 1:43 PM