I see this as a no win situation for you. So better to retain your sanity and cut her loose. If she asks, tell her. The bottom line is that her house is never going to sell if it is overpriced, and you are wasting energy with a dead end where you could be doing something productive.

Send her a link to this thread to see everyone's responses. That way she sees it coming from everyone else and not you.

LOL@Kev, that is a great suggestion.