Problem neighbour/friend?

I have lived here for 15 years, and made friends with my closest neighbours, but have sort of steered clear of one who came across as a bit snobby, Anyway, when my little cat was killed outside, she gathered me up and mopped my tears and I changed my opinion of her (Briefly).. 2 days later, she came across with holiday brochures and suggested a Rhine Cruise.. me and her... alarm bells.. I made excuses and things went back to normal.. Then she invited all her neighbours to a Christmas drinks and mince pies thing and I went.. She asked me in front of everyone what had happened to my husband.. who had left me 2 years previously.. I was so stunned I told her the truth, and it turned out she KNEW the girl involved (I honestly don't think, despite the obvious, she did know this before), and offered to find out stuff about her etc. I said emphatically no no no, I had kept my own counsell about this and felt I had survived it with dignity, so certainly didn;t want to go sniffing around now. Over the next few months, she phoned me and called in with her latest little nugget of into until I said firmly 'NO' and actually did the fingers in the ear thing saying ; la la la I can;t hear you'.. and made it a policy of mine to keep her very much at arms length. I also discovered that minute details of my life had been repeated to this womans daughter, who knew the girl who my ex was with, and who in turn repeated it to her.My distancing myself became a problem for her, until she phoned me late one night and asked me what my problem was, so I told her,,, she had interfered in my life, after I had asked her not to, and she had gossiped about me. Her response was a spiteful attack saying I needed to face facts, my husband had left me... etc etc.. I told her that I KNEW this very well, thanks, and she was the one going on about it.. since then, I have completely cut her out of my life.. I'm civil to her, tried not to make an enemy of her, but encouraged no conversation at all.. Today, one of my sweet kind elderly neighbours came to see me very concerned about this womans behaviour... my life, my comings and goings, etc etc etc are being broadcast far and wide.. any people she sees visiting my house, if she doesn;t know who they are, well, she guesses and then repeats it as fact.. and then, a letter arrives this afternoon, saying 'I owe her, and that she was my friend and have treated her badly'.. This by the way, is a woman of 70, apparently respectable middle cl church going etc.. what the hell do I do? I am considering sending her a letter saying all this, as at least words cannot then be misconstrued exaggerated or manipulated, but worry that this would make things worse