What is wrong with this person?

Quite honestly, sounds like it could be a kind of sociopathy or personality disorder. Compulsive lying, especially to get attention, is a pretty common symptom of several different disorders, one coming to mind is Narcissism (which sounds unlikely). But she did ADMIT to lying before, so it seems unlikely that it's severe. If it gets to the point that she is refusing to concede that she made anything up, it wouldn't be a bad idea to try and get help for her... although if she does have some sort of personality disorder, it's highly unlikely that she can be helped.