If she is actually dyslexic, she needs a structured phonological awareness-based reading program of the Orton-Gillingham variety. I am not familiar with Barton, but a quick google suggests it is an OG-type intervention, which should be effective. If she is still guessing at words based on initial consonants at the end of first grade, then I would say you should pursue remediation now. Phonological awareness is much easier to remediate in young children who have not acquired any meaningful reading vocabulary, than if you wait until they have kludged out some sight vocabulary, at which point they often have habits to be re-trained out of.

It sounds like she has a few words, and is guessing the remaining words very successfully from context or picture clues (using her high Verbal cognition), which is why her teacher thinks she can read, but still has minimal decoding skills, which is why your friend is finding weaknesses on straight word lists.

Obviously, you're not, but if you were homeschooling, I would recommend All About Reading, which is an OG reading program designed for homeschooling and classroom use. Easy to use (it's all scripted), and much cheaper than OG tutoring.

...pronounced like the long vowel and first letter of the alphabet...