I have to say I find the responses to this thread very sad. When did we all become so neurotic about approaches and interactions with strangers, and well-meant gestures towards children!?
When my DS was a few months old (35 years ago) he was in his pram outside a local shop (something else we all did at that time), as I returned to the pram a very elderly lady was 'cooing' to him and he was holding her finger and gurgling much to her delight. She asked how old he was and his name, I told her and she said he had the same name as her father. She then opened her purse and took out a 2p coin and put it in my son's hand "to bring him good fortune" she said. Judging by her clothes she could ill afford it, but it was a common custom in those days. I thanked her warmly and we went our separate ways. I put the coin in a small box where it was later joined by a lock of DS's hair and his first lost tooth. Never for a moment did I think that that lady's kindness and generosity was inappropriate or wrong, and it was perhaps a special moment in her day as it was in mine.
Today a new mother would probably be horrified, maybe even aggressive, and throw the coin away in case it had 'germs' on it. If I was that little old lady I know which response I would prefer. Yes, of course we must keep our children safe, but they don't need to live in a sterile environment, wrapped in cotton wool and growing up believing all strangers are dangerous. Let's be sensible about this !
As for OP's friend, I'm sure it was a kindly and well-meant gesture. In her day young babies were probably not taken to late evening events which prompted her comments. Granny3rose you have known your friend for many years and it seems she has been a good friend when you needed one, so if you want to continue meeting her go ahead, but perhaps gently point out that her touchy-feely and outspoken approach may not be welcomed by today's parents!