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Audi TT - car showing as an insurance marker stolen - oceanicplacebo

One of my friends has purchased the above 10 year old vehicle and now has run a check and a marker has come up as insurance marker stolen. The marker is from over two years ago and when she has contacted the person that she bought the car from he said that when he bought the car from the previous owner it was declared to him that it had been taken with the keys but returned by the police. Where does this leave my friend? Surely if the insurance company had been looking for the car then they would have taken it back from the previous owner who bought it from the person that claimed the insurance? Could it just not have been updated on hpi check? What should she so, she is terrified that the car is going to get taken. How does this affect her own current insurance ? Surely she would not have been given insurance if there was a problem. All other documents check out and no stolen marker from police.