Hi concernedmom:
When I went to Madrid I arrived at 8:15 a.m. (Delta from Atlanta). I scheduled an Iberia flight to Lisbon at 1:05 p.m., and found that I had plenty of time to spare waiting for the flight. Immigration was a breeze for me . . . I'm guessing there was no real line because it was an early flight, and my bags came through surprisingly fast. (That may be an advantage.) I wouldn't think she would need to go through "Customs" as I think you mean here unless she is bringing some goods of some sort into the country. (That's an opinion, don't quote me!)
But, you never can tell with any kind of immigration situation or if there will be luggage woes, so it is always good to budget for extra time just in case something happens!!
Good luck with the planning, and I hope she has a WONDERFUL time!!