Both of my dogs do the same thing. Taz gets her whole body into it, and has even jumped up and run for the door (she's never run into anything so smarter than biskit).
Gypsy snores so loud she's woken herself up. Now that is funny because she start trying to find what made that noise.
I have a GS/Retriever mix that does this, although I don't think he's chasing. I think he's being chased. Sometimes I wake him up then he comes and cuddles up by me...and by that I mean lay on top of me at 2:30 in the morning.
Perhaps she should go see a psychiatrist? I don't think that's normal...how long have you been best friends? You might ask her parents, but it may just be that you've never noticed it before. Have you had sleepovers often to know from experience that it is a recent development?
Mine make sounds in their sleep and jerk a little sometimes. As long as they seem happy while doing it I leave them alone. I have a beagle and a terrier mix that are rescues and sometimes they sound like they are afraid of something so I will usually wake them up and hold them until they relax again. I won't let the monsters get them when they are awake and I won't let them get them in their sleep either.