The thing there is she definitely broke ToS.
She admitted to having a second account.
That's a ToS violation they ban you for. And as a publisher, she should have known that.
It also highlights that once you trip the sensors, so to speak, they crawl up your account's arse with a microscope looking for anything else you've done wrong.
And in this case, found something.
The actual problem though highlights that getting rights back, or getting the rights after an author got them back, does need some special attention. It's like as soon as the book is listed by you, you need to advise Amazon that it was previously published by someone else, the rights reverted to the author, and it is being republished. And then send them a copy of the documentation when they respond. That way it's on file with them.
I can understand the bots getting it wrong though. There are some sites out there with pirated books which would look to the bots as legit. And it is very possible that some of the expanded distribution sites may never have taken the original book down after the rights reverted. That would cause the bots to reject a new submission.
But in this case, after the initial problem was fixed, the discovery of the actual ToS violation became the reason for why nothing was done about it.
It was a banning offense.
And any publisher should know that.