What is the ruling on combining previous service in a usurious bank with current service in an Islamic bank? Will the usurious retirement funds mix with the Islamic ones? And what should be done with the money earned from the usurious bank?

Working in usurious banks is unlawful (haram), and the salary derived from it is prohibited (haram). Any money given after retirement from such a bank is also prohibited because it is a consequence of a prohibited contract. Your friend should not relinquish her right to the pension to the usurious bank. Rather, she should take this money but not benefit from it personally. Instead, she should spend it on general Muslim welfare projects with the intention of disposing of unlawful wealth, and she will be rewarded for that. If her brother is in need and has no money to pay off his debts, there is no harm in her giving him some of that money to settle his debts. If his need is extremely severe, she may give him the entire amount.