After a prolonged debate, he did sell her a single, BUT also took down her
name and address saying she would be receiving a penalty fare demand in the
post.

It's one or the other - the revenue official has acted incorrectly.
Retain the ticket just in case - the penalty fare cannot be enforced as
the ticket exempts it. If the PF notice arrives she will have to appeal
it and if you don't appeal it a court appearance is posible.

If she had been caught en route she could have been penalty fared en
route for the part of the journey already made and sold a ticket for
the remainder.

D