Ok, but who do you treat well in this situation? The unpleasant student, or the person who is asking for information about them? If you remain silent about your honest opinion of the student, you are potentially foisting this unpleasantness on your colleague who might hire her.

For me, the takeaway here is to be honest and to not exaggerate, especially in matters of import. You can't always do the best thing for everyone, so when that's impossible, let the truth be your guide. The other thing is that the adviser should have brought these concerns to the student while she was still under his tutelage.