I'm always amazed when people belittle, "Auto shooters." I've seen many times where auto pictures are better than pictures taken by, "Manual shooters." Auto does fine until you get in a certain circumstance where the camera can't figure something out or you want to control the exposure or do something funky with the picture or control DOF. Can you honestly tell me that Auto mode doesn't take good pictures? It's the same tired argument, and if someone wants to blow a ton of cash on a nice camera and shoot auto, why should we care? It's their money, and with more money probably comes a better auto mode. Since everyone does PP anyway, why not just shoot in a mode where you know you'll get a good basic shot and then do to it whatever you would have tried to do to it by manipulating your camera? If I have time to play around and retake pictures I'm in manual, but if I really need to get a shot, I use auto because I know that it's kind of like an insurance policy.. You can totally blow a shot in manual, but it's hard to blow a shot in Auto. It will more often than not be a pretty decent shot. Now I know that there are reasons for shooting outside auto, such as stopping motion with a faster shutter speed, forcing low-light pictures to expose, etc.
As for your conversation, I'd have corrected any misinformation, but if she was just giving her opinion then let her babble away.. If she was trying to educate the chap with misinformation, then you can summon all the tact you can muster and join the conversation while remaining cordial. Right is right, and a few Wiki searches or thumbing though some books would have been on the agenda. You said you were having fun-plus, you all seem to enjoy photography, so flipping through some books could have been additional fun and learning for your two froends all at the same time..