Step-out I have this scenario/pattern with a sibling that I finally recognized about a year ago, got some help and re-arranged my life order. There is NO changing the pattern - it's cemented in their thinking, they've created a distorted reality that fits their narrative and you are simply a pawn in that patterned thinking. ALL you can do it disengage for good - don't get involved, don't defend yourself at all only compartmentalize this and don't get involved with this SKID. She's in her 30s...this is a well established pattern. And you're right she is likely a narcissist they do this karpmann's drama triangle thing with someone as the habitual bad guy - you. Just stay out of it completely- you've got nothing to prove and the minute she tries to upend your life with her problems ask yourself - I ONLY step in if it impact my space or resources. If DH wants to get involved as long as it's not impacting you in those ways then just stay out of it. 

These people are patterned and they never gain insight into their behaviors they simply project their feelings, behaviors and actions onto others. They are empty inside and it's not going to change.

The challenge with my toxic SKIDs and some of their followers is escalating abject misery will only help build their victim narrative - woe is me! Better to just realize there's nothing that I can do to fix this and wipe my hands clean of it all. Unless there's a big accusation that would put me in a very perilous situation I really don't need to get involved. One time a SKID insinuated abuse- that's about the only time I was HOT on his trail- when? where? what happened? Please tell us and certainly if this occurred we have to keep you safe and if it means safe from stepmom of course! He got stuck in his lie and realized he was out of his depth...I don't know if it stopped him from telling the lies to others but that was serious enough for me to escalate it.

On the other hand when he blamed me for ruining his professional football career and did it infront of MY parents that was a situation where it was so unbelievable (not in shape, not athletic enough or discipline enough for pro) I simply looked at his fancy cleats and said well my paycheck paid for your uniform and shoes but alas even with evidence to the contrary that's a story he told himself too many times and now believes. Never going to be able to change that distorted reality and frankly I have better places to put my energy. 
 

step-out wrote:

Update, Tumbles.... There has been, as I said so, no engagement, though she tried. I just can't wiggle room my headspace back into that toxic energy. I just don't know what I'm going to do when I'm forced to have to be in a physical space with her. She's a very unwell person; of this I know for sure. DH has a bit more insight, but he'll never really get it. I feel like I need a cheer squad to support me. 

Do you have to share physical space with her? I'd say if it's not mandatory SKIP those events or encounters. Seriously. What do you have to lose? Nothing. Only to gain peace and quiet.