Laure's answer is perhaps incomplete (even if technically right).
Both of your options are viable, depending what you mean, and admittedly the second is a rather obscure usage with respect to oneself.
You probably mean the first. She's there, stretched out. While that is the case, something happens.
The second could mean that the event happens during that moment she is laying herself down. She's not standing. She's not already stretched out. This is the act of transition. Effectively the same meaning as the egg scenario, but it can apply to other things; frequently used with respect to carpets, for example.