Protocol for writing a recommendation letter for someone you only know on a personal basis I am a graduate student. A close friend of mine is applying to post graduate research position and has asked me to provide a recommendation for her. I have never written a formal recommendation letter before and would like some advice on how to write this. 

For some background, I am studying in a unrelated field compared to what she is applying for - Quantitative Finance vs. psychological counseling. I have personally known her for many years and she is very supportive with strengths such as a warm personality, a nurturing nature, and a great sense of humor. Her attitude is very laid back and she is very easy to get to know. Her loyalty and trust is unshakeable. However, my relationship with her is only on a personal level. While I think she is an amazing person, my knowledge of her academically and research wise is meager at best.

What are graduate admissions panels typically looking for in a recommendation letter? Is there a particular format they require? I just want to be the most help I can and help my friend achieve admission.
Graduate admissions panels are not (generally) looking for personal references. They are looking for academic references.

Tell your friend to find another letter writer; nothing you say about her wonderful personality will help her get admitted. At best, it would be a wasted opportunity for her to submit an actual academic reference; more likely, it would actively work against her (looks like she's clueless, or such a bad student that she can't get anyone to write an academic letter for her).

Also see Kisses of Death in the Graduate School Application Process, page 2, "Harmful letters of recommendation," subsection "Inappropriate sources."