AirTag doesn’t update the location even though its close to an iphone with wifi bluetooth and find my turned on

Which model is her iPhone? What version of iOS is it running?

The following should be enabled on her iPhone:

• Find My: Settings > Privacy & Security > System Services > Find My iPhone
• Location Services: Settings > Privacy & Security > Location Services
• Significant Locations: Settings > Privacy & Security > Location Services > System Services > Significant Locations
• Bluetooth: Settings > Bluetooth
• Precision Finding (iPhone 11 or newer): Settings > Privacy & Security > Location Services > Find My > Precise Location

In addition, her phone needs an active Internet connection, either via Wi-Fi or cellular data. Where is she located in relationship to you?

Per chance is she getting a notification on her iPhone that either an AirTag is near her or that one is following her?

Maybe the battery is dead, see this article on how to replace the battery.

How to replace the battery in your AirTag – Apple Support (UK)

Or, see this article on how to reset your Airtag.

How to reset your AirTag – Apple Support (UK)