Via iTunes they will only be stored in the iPad backup (so will be 'copied' during each backup), which is only really readable via the restore process - and it's always a good idea to have a backup of your content. The location of the backup is :
Mac: ~/Library/Application Support/MobileSync/Backup/
Windows XP: \Documents and Settings\(username)\Application Data\Apple Computer\MobileSync\Backup\
Windows Vista and Windows 7: \Users\(username)\AppData\Roaming\Apple Computer\MobileSync\Backup\
Copying photos/videos taken with the Photos app to a computer in a readable/usable format is done outside of iTunes : http://support.apple.com/kb/HT4083 . So she could (and probably should) copy them off 'properly' so that she can backup externally any that she wants to keep/doesn't want to risk losing.
In terms of the iPad backup, then yes they are effectively encrypted (except to the restore process). If you want to get the videos/photos off in a format that can then be read/used on the computer and backed up to external drives or CDs/DVDs etc then http://support.apple.com/kb/HT4083
The backup is there so that you can restore the content to the iPad if anything happens to it e.g. if you lose or have the iPad stolen then you still have the content so that you can copy it onto a replacement
If she copies the videos and photos off then she can make copies of them and then delete them from the iPad (and after making copies they can be deleted from the computer) - that way they won't be backed up each time and the backup shouldn't take as long or take up as much space. I wouldn't advise deleting the actual iPad backup as you never know when you might need it. Is there any other content that she could copy off the computer e.g. onto a portable drive ?
it's such a small drive, I think the iPad backup has taken up most of the space! An external drive might be the only way to go but the only way that could be useful is if the iTunes backups could be stored on there.
I don't really know how to solve this then...
She is an older lady that really wants to use the iPad rather than the PC, we can't upgrade to the new OS5 as she is too full on the computer, she wants the photos and video on the iPad but not on the computer.
All this is a nightmare when you are in another country trying to get an old lady to click here and there on a computer that won't respond because it's too full!!!!