Jenny:
You need fill w-7 to apply tax ID for your parents, read its instruction carefully for documents required and where to send. Your friend is right. If you are applying ID by using w-7, you need send your tax return and w-7 together to the location instructed in w-7 instruction instead of the address mentioned in form 1040. They will process Tax ID first and then your tax return (you can leave tax ID blank in your tax return).
For social security number application, I dont see any problem for a green card holder. just go to the website to see any procedures. You can use her Tax ID this time until you get her social security number for later.
http://www.irs.gov/pub/irs-pdf/fw7.pdf
http://www.ssa.gov/online/ss-5.html
Hope my words make some sense for you.
