I do not bake professionally, but I periodically get a random request from friends to do a cake or cake pops, which I do for free, out of my home kitchen.  Recently a "friend of a friend" asked me to do cake pops for a birthday party, and how much would I charge . Can anyone give me some very GENERAL advice on the legalities of charging for baked goods, in terms of what my liability is should something go wrong, someone get sick, the product doesn't live up to her expectations?  Or, point me in the right direction to find out (I'm in Indiana)? My gut is telling me I should not be selling in this way, and I'd like to politely get out of this. Thank you in advance.

As a general rule your libalitiy is great :(  But......many, many a bakery owner/current decorator worth her/his salt has started by working out of their home kitchen (as I did some 35 yrs ago!).  Pricing has soooo many factors to consider it is very hard to suggest anything.   Here's a recent thread that could help you:  https://www.cakecentral.com/forum/t/848846/how-much-should-i-charge-for-a-2-tiered-cake   Do a google search on pricing cakes - there is a wealth of infromation to help you nail down some starting prices.   

You might want to check with your township or county office if any permit/license is required in order to sell  baked goods from your home.