Great question. I can tell you really care about her by the way you're considering her feelings and welfare.
I think the crux of the matter is "Is fear causing the pain or is pain causing the fear?" I see two possibilities here:
Vaginismus is a condition in which a woman involuntarily contracts the muscles of her vagina. This leads to pain when insertion is attempted. It is an unconscous attempt to prevent penetration and can be associated with psychological conflicts about sexual intercourse. It can result from abuse or from being told that sex is "dirty" or shameful.
A second possibility is that there is a medical condition that is producing the pain, which is leading to her unconsciously attempting to prevent penetration. The hymen is a membrane at the opening of the vagina that normally ruptures the first time a woman has intercourse. The tearing of the hymen is what leads to pain and spotting of blood the first time a woman has intercourse. Generally, once the hymen is torn and heals, the woman doesn't experience further pain with normal intercourse. It is possible that her hymen simply didn't tear as it normally would. This is easily checked out with a pelvic exam. Other possibilities include some form of inflammation possibly of the urethra or endometrium.
This is probably more of an anatomy lesson than you needed. To move to answer your question, the first step is to rule out a medical problem. This is fairly easy to check out and you don't want to spend months chasing a psychological cause and then it turn out to be physical. A physical cause can be ruled out in one appointment with a health care provider. If a physical cause is ruled out, then she will probably need to see a therapist to resolve the problem. Vaginismus usually requires professional treatment. Any decent therapist will refer her to rule out a medical cause first anyway, so you might as well start there.