No, if she withdraws the inland application, she's free to file another application, either inland or outland. The withdrawn application is considered finished.
And there is no reason to lie about the withdrawn application. It would be a bad idea anyway, since I'm sure that even if they don't see the forms that went with it, they will certainly know it existed and lying about it would be a bad, bad thing. They will probably wonder why you withdrew the first application, so it's best to voluntarily explain it in your new application.
And, as has been said before, you might want to stick with the inland application. I guess it depends on how far along you are. I mean, if you jist sent it in a month ago, then you're not losing much, but if it's been processing for a year, I'd stick with it.