The word Sie

I read somewhere that when the word Sie is used in a sentence and is refered to a woman, it is spelled with a small "s" instead of a capitalized one.  is this true or is it not.

Yes, it is.  However, if it is the first word of a sentence it will be capitalized in either case, hence the confusion if you don't understand the context of the situation.

Hi T.bone and Byron,

Yes, we have "sie" = "she" and "Sie"= "you".  Unlike in English in German we differentiate between formal "Sie" and informal "du". "Wie heißen Sie?" = "What is your name" As we also use the same word for "she" it can get confusing at times for German learners if the sentence is out of context. 

Liebe Gruß und viel Spaß beim Lernen

Paul