You are correct. Her parents were permanent residents of the U.S. by the time she was born, she was never a citizen of another country, and a person can not be born a naturalized citizen.
As far as the USSC is concerned, she is a NBC, and they get to make the decision.
There’s no law making children born to foreign nationals, whether here legally or illegally, U.S. citizens. They’re definitely NOT natural born Citizens.
Kamala is a court created citizen(Wong Kim Ark). IOWs a citizen in name only since only Congress has the power of naturalization.