What are the rules for rolling a 401K?

My wife, a part-time employee, has $3500 in a 401 K. The plan permitted contributions but no matching. The company she works for was purchased in mid-2008. The new company moved the 401 K of full time employees to a new plan administrator.. The 401Ks of part-time employees were not moved to the new administrator but were left with the old 401K plan administrator.
Now my wife is told that she is NOT eligible to continue contributing to her 401K as long as she remains in part-time employee status and that the 401K plan is "frozen", i.e., she cannot move the plan to the new administrator and she cannot roll the 401K to her IRA.
Question: Even though my wife is still a part-time employee of the company that purchased her old company, and because she is forbidden from contributing to her 401K plan administered by the new owners of the company, is she entitled to roll her "frozen" 401K to her IRA?
THanks