1. You ought to let your right-hand fingernails grow just past the ball of the finger. The sound will be different, and you will be able to strum with the backs of the nails. I've never seen anyone use them as picks, though. Your fingers still play as before, but the flesh of the finger is given "bite" by the attached nail. This only applies to bare-finger picking, of course, and many steel-string guitarists use picks on all playing fingers.

2. YOur friend is teaching you classical or parlor-style playing, and she is right. It really works well on Anglo-American ballads and old English songs like "Greensleeves." Listen to early Joan Baez, or Burl Ives, or Oscar Brand recordings for ideas as to what can be done with this "four-finger picking," as some call it. Plenty of variations possible. I played this way for about two years until I started learning other styles such as Carter Family, Travis, and Cotten Picking. Folk styles allow so much variation that it is difficult to call any style "right." If it works for you, do it.