One iTunes, two iTunes accounts

*How can we transfer her music onto the 'music mac'?*

You could begin with this guide: iTunes for Mac: How to copy purchases between authorized computers

*Will iTunes allow us to have two accounts on the one computer?*

Do you mean two iTunes Store accounts or two Mac User accounts?

You can have both. If you want all the songs in a single library you can move the songs and authorise the computer to play purchases from both accounts. You simply have to play a song from either account and iTunes will ask you to supply the account details to authorise them: About iTunes Music Store Authorisation and Deauthorisation

If you want multiple Mac user accounts and separate libraries go to the Apple icon>System Preferences>Accounts and create a new user.