I'm not the most computer savvy but here's what I know.
I have a Brother PC7500 which uses a rewritable card for the designs. The rewritable card did come in a CD jewel case with a little insert to hold it steady. I think this is because jewel cases are a common product and not so small that you'd loose it.
I use an Amazing Box which is the same thing as a Magic Box. It is the device in which you put the rewritable card and use it's software (which comes with it) to tell it which designs you want and it puts the design info on the card. The card then goes in your embroidery machine so the machine can stitch the design. My card holds 6 designs at a time. When you but the magic or amazing box a card comes with it (at least mine did) The rewritable cards are small - about 1 x 1 1/2" The Amazing (Magic) Box connects to your computer (I think in one of the serial ports in the back - I know mine isn't in my USB port) When you buy the Amazing or Magic Box you get the box itself, a rewritable card, the cord to connect to your computer and the software you need for the program.
I also use Embird. It is the most cost effective program (and an easy to use excellant program) With Embird I can change design format. ie: you download a freebie design of the net but it is HUS format. My machine takes PES. Embird can change the design into the correct format for my machine. It also can resize the design, add text, merge 2 designs into 1, split off pieces of designs - lots of stuff. You can download a free, fully functional trial version of Embird off the net (I forget their web address but a google search should hit it pretty fast) If you like it you can buy it and they email you serial #'s you install.
There are lots of other software out there for resizing, reformating etc but really - Embird does all of that for a skinny fraction of the price.
There are untold # of embroidery sites on the internet. Some
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offer thousands of free designs for download (that site also has links to tons of other sites) Some sites sell their design packs and offer some free designs so you can try out their work (not all digitizers are the same - some offer superb products some not so much)
Some people trade designs they have purchased but this violates the copyright of the designs.
If your wife hasn't done machine embroidery before she also will have to learn about stabalizers.
I check this board a couple times a week. If you have more questions I'll do my best.
What I'd do if I were you. Surf - go to annthegran's site - look over the designs and dowload some. Lots of embroidery sites have a tips or FAQ section (hope you have high speed). When you have a stock of designs download the Embird and play with it (you get 30 days) Embird has free tutorials to download as well. After you've poked around you'll probably have more questions.
Also, most embroiders are really nice. I've asked some embarassingly dumb questions and generally people are too kind to make an issue of it.
Have fun. Kelly