Two things -
1. Yes you can change her address, and you can also include on the 21-4138 telling the VA she has moved to that facility. You should also get a statment of occupancy from the ALF, which will state she is a resident as well as her monthly costs and services provided.
2. DO NOT take the papers to your local VA office for them to send off. You need to mail the application via Return Receipt to the proper pension center for her state, and keep a complete copy of the application and documents included.
See this link on the forums here for the state break down.
http://www.veteranaid.org/forums/index.php/topic,1312.0.htmlGood luck with the process.