At a recent funeral of a friend her ashes were brought into the Church for the Mass. I thought this was not allowed?

The practice you describe is allowed. In 1997 the American bishops received permission from the Congregation for Divine Worship for the celebration of funeral rites in the presence of cremated remains. 
 
There are some adaptions to the rites, however. The priest may greet the remains at the door and sprinkle them with holy water, but the covering of the remains with the cloth (the Pall) is omitted. The Easter candle may be placed near the cremated remains, but there was no mention of the priest incensing the remains. Otherwise, the funeral mass is celebrated as laid down in the Roman Missal and the funeral ritual. 
 
Prayers, which do not make reference to honoring the burying of the body of the deceased, should be chosen, instead of those, which have these references (cf Funeral Ritual #428). The prayers of final commendation at the end of the funeral mass are largely followed in the normal way. It is uncertain at this point whether the remains are to be incensed or not. It would seem this is permitted, but not required. The deacon or priest concludes the funeral Mass with an alternate dismissal listed in the rite, which makes no reference to the body. 
 
The forbiddance of cremation by the church in the past was due to the fact that many made use of it as a denial of the resurrection of the body. This is seldom the case today, but such an attitude must be ruled out before cremation is permitted. But note, "Although cremation is permitted by the church, it does not enjoy the same value as Burial of the body. The Church clearly prefers and urges that the body of the deceased be present for the funeral rites, since the presence of the human body better expresses the values which the Church affirms in those rites. (# 413)