She was offered the job, but it had magically transformed into a three year contract with no outs. When she told the ND this was not what was said on the phone, the ND wouldn't budge, conveniently forgetting the original offer. The manager probably figured the woman had driven a long way and was ready to accept anything. Thankfully, she was smart enough to read the handwriting on the wall, turned it down and ended up with something much better.
Yes, selective memory is a common malady among managers. It's right up there with restless leg syndrome... you wouldn't think it actually exists, but it does.
That's why it is imperative that in any phone conversation or face to face interview, you take good notes. If something isn't in writing, chances are it is gone forever.
So, how can you protect yourself? Well, if you're doing a phone interview and the ND says, "Two years, top 50 out," write it down. Then say, "Let me write this down... two years, and a top 50 out, correct?" This lets the ND know you're taking notes and he'll have a hard time changing his tune if and when you arrive for a face to face interview. You might also review things at the end of the phone call. Then ask the ND to send you an email detailing the parameters of the job. That puts any offer in writing, and now you have a paper trail.
The bottom line is that if the job parameters change between the original phone call and the actual interview, then the ND is someone you don't want to work for anyway. If a manager lies to you before you're even hired, imagine what it would be like to work for that person.