I am not sure about a practice tutorial, but I bet there are YouTube videos on shopping for book and other things. It is pretty straight forward though. To browse you launch the web browser and shop hit the shop button, etc. I haven't even read the manual, but the nook color does come with one and I assume it would address everything as well.
I get migraines and I was worried about reading on an LCD screen. I have to say it doesn't really bother me (unless I stay up until 4am reading and even without the LCD that would ruin me). I keep it on night mode and fairly low brightness, almost the lowest it goes, and that works well for me.
Yes the NC will give you a definition when tapping or highlighting a word. It also will give you the option to Google or Wikipedia the word. She can take notes and highlight passages, but can't export those so I believe this is why other people install other readers. I have not found the need for this myself. I personally prefer the NCs stock reader over other apps, but then it is all personal preference.
I have never used the lend a book yet. I believe that you can only lend it once though and only for two weeks. I am not sure about being able to read it, but I think you have to wait until it is returned.
I am sure your wife will love it! I would Google some nook color videos and watch a bunch to get a feeling for it. Or if you are in the US, go to a B&N and play around with one for a while. Good luck!