I was looking at a friends car that won't start and it seems the starter is bad. it has 12V all the time on the thick wire and and the little wire gets 12V when the key is in the start position. when the key is turned the "FUEL CUT OUT" light is lit. is that normal? also she said she could distincly smell burning rubber before it stopped working, coincidence?

Either a bad starter or a bad ground... the starter comes off pretty easily... take it off and have it bench tested.