Her thesis advisor's opinion of her chances may weigh heavily in any PhD application packets, since the advisor would normally be expected to write a recommendation letter. Usually, if you are advising a very strong Master's candidate, you would not be dismissive of her chances, especially if she has offered to study for an extra two years to make up any gaps in her knowledge. I'm sorry that this isn't rosier.
But perhaps there is more to understand... There seems to be a contradiction in your question when you say she is having trouble getting good grades, but has at the same time won two scholarships and has near perfect scores.