Help: New owner of my iPhone getting prompted for my iTunes account.

My wife is now using my old computer and iPhone 3g.
1. In iTunes on the PC, she is logged in.
2. iTunes says she has one app to upgrade.
3. Clicking upgrade, iTunes then shows her account name and says there are no apps to upgrade.
4. Go back to iTunes home page and it says she has one app to upgrade.
5. My account is actually the account with 1 app to upgrade.
1. On the iPhone, under settings she is listed as the current account.
2. Try to buy an app from the app store and she gets prompted for my App store account.
Has anyone seen this before? I'm at a loss as to how the two accounts are intermingled like this. Everywhere I look she is listed as the active account. But as soon as an upgrade or purchase is attempted it goes back to my account.
Thank you in advance,
Gary

You can do this on your iPad or iPhone - please see Find My iPhone Activation Lock: Removing a device from a previous owner’s account - Apple Support (which is written from the point of view of the new owner).

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