Can I withdraw funds from my 401K if I am 65, still work part time for the same employer, and do not want to quit my job?

My friend (who has been a US citizen for at least 18 years but whose English language skills are still very limited) has a 401K plan with her employer (one of resorts in Wisconsin; she works in housekeeping). She has retired a few years ago but is still working part-time for the same employer. When she signed up for this plan she was told that she can begin withdrawing funds from this account after she has reached 59 and 1/2 years of age. Last year she was told, no,she needs to be 65. This September she turned 65 and we went back to the bank that is holding her 401K account funds. She is a widow now and in real need of cash to buy a car so that she and her two dependants could get to work, so she was hoping to withdraw at least part of her retirement funds for that purpose. The bank officer told her that her 401K plan has a rule that no one who is still empoyed with this company cannot withdraw any funds unless they quit their job, independently of their age (even if they 90 years old!). She also said that the only way to get cash from her 401K is to take a loan from it and pay interest to yourself. Is this true? Does she realy have to make a choice between quitting her 20-year employment with this company and getting some cash from her own retirement account? She needs this part time job to add to her tiny pension, but she also needs the money now. Please advise.