My former friend did this.
She repeated her stories so much, I knew them as if they were my own. However, while the stories were basically true, each retelling she would embellish it to make her sound better than she probably was in the beginning. You know how after an interaction, you wished you'd said X, Y, or Z? Well, each time she'd retell it, she claimed she did say X, Y, or Z and for a while it left me feeling like I'd never want to be in a disagreement with her because she'd wipe the floor with me verbally.
I never did say anything to her about it. Partly it was the fear of the above but also because I couldn't get a word in edgeways!