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Did they apply to restore her status when they applied for the second work permit? Hope so.

Based on the information you've provided, there is no visa she can apply for now since she is out of status in Canada. She has to wait for restoration to be approved (again, assuming they did in fact apply for restoration).
 
It's unclear if they applied for restoration in addition to the work permit. It sounds like the lawyer is saying that she will have to apply for a new visa once the work permit arrives.
 
Assume she is receiving cash. Employers may never be able to hire a live-in caregiver from abroad again if they are also employing her illegally. Laughed out loud when you suggested that the nanny may be going on a free vacation and not working.
 
It sounds like they offered her the choice to come on the vacation with them. Sounded like a win-win for both as Im sure she would help out with the kids and they would cover the trip and possibly $$ like you said. She sounded like she wanted to go if she had visa situation cleared up. I didn't press her for more details of what would actually be taking place on the trip
 
It sounds like they offered her the choice to come on the vacation with them. Sounded like a win-win for both as Im sure she would help out with the kids and they would cover the trip and possibly $$ like you said. She sounded like she wanted to go if she had visa situation cleared up. I didn't press her for more details of what would actually be taking place on the trip

Based on the information you've provided, she is working illegally. If so, she's flirting with a six month ban from Canada.