I really think the only thing you can do is be honest with her. You already told her that hers might not be the best home for him, and from her reaction it appears she might not be the best home for anything. If she can't realize that not every dog is great in every home, then there is not much you can do to get her to understand.
What I have told people in the past is if they do not have the time or energy to work with a high energy dog, then it might be better if they found a home for it where it got the attention it needs. Of course you don't want to be mean about it, but it sounds like this lady need a reality check. I'm really surprised the SPCA would adopt out a dog to someone who is not willing do work with it. Perhaps you should call them and tell them what's up, they may be very interested to know how she is dealing with their rescue.