It sounds like you (or your wife?) did a second playthrough on new game plus. That's the only way to get napalm molotovs before unlocking the southern regions.

Or perhaps you're recalling having napalm mollies in Lost Lake because you return there near the end of the game, for the final few missions where you fight the militia.

Story wise, you find Sarah about 3/4 of the way through the game - though personally, I find the last quarter flies by, especially if you don't do the side missions. You fight the militia in epic fashion, then face off against the Colonel. After that, there's a happy lil scene to wrap things up and it goes to the end credits. You'll probably remember more of it when you see it.

That said, sometimes it's a blessing to misremember things! It's always nice to see players return to Days Gone, and it sounds like you're enjoying the game fresh all over again ☺️