Ms Powell, 26, one of five people who deny murdering the girl, said that she sat in the car while three of the other accused took Suzanne into woods at a remote spot called Werneth Low, near Stockport.
All five had brought Suzanne from Moston, Greater Manchester, 15 miles away.
'I saw a flash. I turned round and looked and saw Suzanne in flames. She was screaming,' Ms Powell told Peter Openshaw QC, for the prosecution.
Mr Openshaw asked Ms Powell, of Moston, if she was concerned with the plight of Suzanne. She said: 'I was numb. I was scared.'
Ms Powell insisted that she believed Suzanne would be freed at the wood but agreed Suzanne was removed from a house where she was held prisoner because Suzanne's sister, Michelle, had said the sisters' stepfather was going to tell police she was missing.
Asked what Suzanne would have done after she was dumped alive, Ms Powell replied: 'Probably gone home.'
Ms Powell agreed Suzanne was taken into the wood that night in December wearing only knickers and leggings.
Under re-examination by her defending counsel, Jack Price QC, she said she did not see anyone pour petrol on Suzanne. Asked if she knew who poured the petrol and set fire to her, she replied: 'No'.
Ms Powell's estranged husband, Glyn Powell, 28, Bernadette McNeilly, 24, Jeffrey Leigh, 26, and Anthony Dudson, 17, all of Moston, are also accused of the murder.
Clifford Pook, 18, also of Moston, was cleared of murder last week on the direction of the judge. Ms Powell, Mr McNeilly and Mr Pook have all pleaded guilty to false imprisonment, a charge the others deny.
Mr Pook has admitted conspiracy to commit grievous bodily harm, which is denied by the other five.
Anthony Dudson, 17, said that he had sexual relationships with co-accused Jean Powell and Bernadette McNeilly - as well as with Suzanne Capper.
In November, Mr Dudson contracted pubic lice, or 'crabs', went to see a doctor and had his pubic hair shaved. Ms McNeilly told him she thought that he had caught them from Suzanne.
'I told Jean I thought I got them from Bernie (McNeilly),' he told the court.
Mr Dudson described how Glyn Powell later shaved Suzanne's head in the kitchen. Mr Dudson admitted helping to shave Suzanne's head but claimed it was because he was 'scared' of Glyn Powell.
Ms McNeilly then told Suzanne to go upstairs and shave off her (Suzanne's) pubic hair. Suzanne did so without protesting because she was 'too scared', Mr Dudson said.
The case continues today.