This seems weird as I just looked up "rokurokubi" and "rokuro" appears to mean "windlass, winch", so wouldn't her neck retract just like Inspector Gadget. I love the joke, but the neck-twisting feels uncomfortable (which is the joke, I know).
No you're right. Normally every Depiction of the Neck Youkai i always seen myself usually potrays them as being able to retract their neck back into their body.
I've never seen a version where their long neck is long all the time.
The original Version is supposed to be able to blend into Human society and even take up the position of someone else.
Possible hypothesis: she can retract her neck, but it suits her to instead stuff her neck into her sweater - for whatever reason the attention is worth the soreness. Supplemental hypothesis: her actual breasts are small and she's self-conscious about it.