At 4 months after my daughter was SB at almost 29 weeks, I was just beginning to emerge from the fog. Frankly, I needed to wallow, to fully experience the depth of my loss before I could move on. I was still having PP hormonal roller coasters at that point, separate from any mental/emotional state. My Mom was worried that I had PPD, which I may have had (how to distinguish grief from PPD?), but I had to hit bottom before I could begin to go up. Even now, at just short of a year from her birth/death, I feel I am only just beginning to heal. That her child had a genetic defect, that she birthed him knowing he was already dead, that she lost him at all, that she is worried about genetic defects in future children, can she have future children, etc, are all separate issues that have to be grieved, and may be grieved at different rates and timetables.
Clinically, I recognized that I needed to get out, but the effort of composing myself for the event was often more than I could bear. I couldn't drive safely at times, and was not even aware of it at the moment. I couldn't sleep, I woke up feeling I was in labor every time I had menstrual cramps, blamed myself in irrational ways just because I needed someone, something to blame. Fortunately for me, dh and I grieved similarly and helpfully for each other, amd "moved on" at the same rate. One of the ways we re emerged into life was to eat out. We spent more money on restaurants those first 6m than we probably had in 2 or 3 years. I was too emotionally spent to even cook for my family, and it provided us with the excuse we needed that it was "okay" to do something pleasureable and that it didn't diminish who our baby was to us.
As far as babies, I still have trouble around babies, esp girls. It has gotten better, that at this point is only that newborn stage that hits me in the stomach. I still rebel at the unfairness of it all.
My point, I guess, is that she probably is moving on, but sometimes you have to go backwards and forwards to get there. Day by day it may not seem like much, but in the overall there should be a general direction toward healing. If she is truly having deep depression, she may need to see her dr about it for medication. Otherwise, let her experience however deep she needs to be, and be there to pull her out of it when she needs, on her own terms, when she asks for it.