There are four possible options for responding to this manipulative behavior--ignore it, get rid of her, give in to her, or sit down and have THE difficult conversation. Are you willing to face the possible consequences related to each strategy?
As a mediator, I am a proponent of open and honest dialogue. Here is my plan for using dialogue to manage this conflict:
1. Prepare. Make some notes about the situation (including all of the examples of unacceptable behavior that you remember) and your feelings. Write about where you are, where you want to be, and how you might get there.
2. Call for a meeting. Set the stage. Sit down at a time when you are both clear headed and able to give this important conversation the time and energy it deserves.
3. Speak from the heart. Do not point fingers of blame. Let her know how much you value her but not her behavior.
4. Listen, listen, listen. Listen as if you are an outside observer with no prior knowledge of the situation. Seek to understand her true motivation. Twenty years in the mediation business has taught me that there are at least two sides to every story. You may be very surprised when you hear the rest of the story. Don't fight back or try to beat her at her own game. She has been practicing these skills for a lifetime, and you're an amateur. If she is not able to have this conversation, you have to accept her limitations and decide your next course of action. (Remember, you have four possible options for responding.)
5. Define the emotions. I can almost guarantee you that she sees herself as the victim, not the perpetrator. Her manipulative behavior is probably a response to her feeling dismissed, discounted, disenfranchised, or disrespected. Sometimes, just defining that emotion and realizing that both of us feel the same way is enough to resolve the dispute. Brainstorm ideas about how you can work together and find solutions that work for both of you.
6. Follow-up, follow-up, follow-up. Workplace relationships are on-going. Whatever solutions you find will need to tuned-up and re-checked. Let her know that this is just the start of on-going dialogue.