Although we may never know, remember that this is a true story and Wiesel says “Mrs. Schachter had lost her mind.”
Elie knew Mrs. Schachter before the war, and she is described as a “quiet, tense woman with piercing eyes” (ch 2). When she is separated from her husband, she can’t handle it, even though she was a strong woman and a breadwinner before.
She begins by moaning, and then crying, and then becomes hysterical. Although we consider he cries about fire as a type of foreshadowing because so many Jews were killed in fire, there could be different sources of the trauma other than prophecy.
We know that some word did get back about what was happening. Mrs. Schachter might have heard the story from someone else. For example, Moishe the Beadle returned and tried to warn people.
“Day after day, night after night, he went from one Jewish house to the next, telling his story…” (ch 1)
Although Moishe did not refer to fire, there could have been someone else that did. We know Mrs. Schachter was a shrewd woman.
Another possibility is that she saw fire because she could not breathe. Everyone was tightly cramped in those train cars, and there was not much air. Given her mental instability, she might have imagined there was a fire due to the lack of oxygen.
Either way, Mrs. Schachter's story is tragic. She lost her husband, and then her mind. She had to be gagged and tackled in order to stop her from screaming.