I 130 sibling petition

When your sister graduated in 04, how did she get her work card? Was it thought the OPT program? If so, then she was in status at that point. Then in 06, when she returned to school, why didn't she extend her F-1 status as she was still a student? During this time, there was no basis for her to adjust status.
However she should have been able to change status from F1 to F1 on OPT training, back to F1, unless she had also married a USC, then she could have adjusted status.
However, if as you say she was out of status for 2 years, and as she has left the country, there is a 10 year bar against her reentry.
Because you have an approved I-130 for her, doesn't mean she is able to adjust status. The current visa bulletin shows the Department of State releasing visa numbers for people with I-130's filed in 1986-1998 depending on the country. You can follow the link below or google visa bulletin to come to the Visa Bulletin issued by the Department of State. She is under the 4th category in the family chart. You don't mention where you are from, but this is how you find out when she can adjust status.
With any luck, she should be out the 10 years by the time her priority date becomes current. Then the question will be, if they realize she incurred illegal presence, whether there will be a waiver available to her to permit her reentry.

This is a bit complicated, so consult a lawyer about the specifics of the case.

In most situations, staying past the expiration of a visa, and then departing the U.S., can cause huge problems. After a visa expiration, a person begins accruing "unlawful presence" time. If the person leaves after 180 days of unlawful presence, they have a three-year bar to coming back. If they leave after a year of unlawful presence, they have a ten-year bar to coming back. Thios would prevent immediate approval of the family petition you filed.

However, to accrue unlawful presence and be in any trouble under these bars, you need to be over 18 when accruing the time AND you either need to have entered illegally OR your visa needs to have an actual expiration date that you have stayed past .

If your sister was admitted on an F-1 student visa, however, she was likely admitted with an I-94 in her passport marked "D/S" - "Duration of Status." This gives no finite end date to overstay. This said, it doesn't automatically mean she is safe from the three/ten-year reentry bars - an F-1 can still be exempt if there is some formal government finding that the person has overstayed and then unlawful presence starts to accrue from there. A denial of a change of status petition/application would be one way, but not the only way, for this to happen.

Like I said, complicated - so speak to a lawyer to get the real story as it applies to your sister's situation. Good luck!

Glad I could help! Good news on the "D/S" status - this means that she will NOT be subject to the three- or ten- year bar to reentry. Sh will still need to wait until an immigrant visa is available in the Family 4th category for your sister's country of birth for the priority date of the petition. This could be a long wait, unfortunately.

As to what the other lawyer said about not returning as a visitor or student for ten years: my guess is that she was saying that she will have trouble entering as a visitor or student at any time before the green card case is approved (both types of visa require the intent to stay only temporarily and then return home, and having a green card case on file kind of proves the opposite intent) - it's just that the waiting period at the time was probably about ten years, and it may still be that or more. It wasn't that after ten years, your sister could come for a visit or as a student - it's that she can't uses those visas because of the nonimmigrant intent requirement, CAN use work visas such as the H-1B or L-1 since they don't have this nonimmigrant intent requirement, and that the wait at the time for the green card was probably around ten years back then.

On the change of address: You should definitely inform USCIS as the petitioner by calling them. The problem is, that the petition has now been approved and the National Visa Center needs to be notified of the approval since your sister will [eventually] need to process abroad. This will likely require another filing (though not completely redoing the I-130 - a different filing called an I-824) to have this separate action taken on the I-130. As to when this should be done, it's a tough call and it depends on how close we are to the priority date being current and the likelihood of your sister staying at her current address - another thing you should speak with a lawyer about.