Have you prayed for help? If i have problems with someone I send hordes of angels their way (to them and whichever energies/ being they might be associated with), to either give them Love and Healing until they genuinely change (for the better), or disappear from my life. Make sure you cleanse your energies regularly (if you don't already), ground and regularly cut cords with/ to her. Hope that helps. It can be stressful to deal with a narcissist for sure, but just try to remember that in the long run the good energies always outnumber any negative ones, and we always win Love and Light
forgot to say - it helps to remind oneself too that people like her are usually (on some level) jealous of people like us. We are (on average) the calm, strength, confidence, compassion, insightfulness, etc. that they which they had (ie have lost the connection to inside themselves)... When I think about narcissists that way, all that is left is pity. I am still not going to let them exploit me because of it, but it is a better position to be in than hate
just commenting (not having taken offense). I meant prayer on top of all the usual - i,e. reasonably controlling ones thoughts, emotions, reactions and actions usually is still necessary. In my experience narcissists, sociopaths, and psychopaths are often just puppets, there is a lot of negative energies/ beings behind them, and which are the actual driving force. I know a few narcissists, and sociopaths that really are not intelligent enough to do all that plotting, or controlling and guiding of the energetic havoc they cause - there must be something intelligent behind them. I.e. if such people come with negative energy back-up, it is only fair that we draft in positive energy back-up . (given obviously that one has higher believes and is open to ask for spiritual help. And in my experience most believers under-use the help that is available to us, rather than greedily overuse (if there is such a thing)). Love and Light!
like Arielle says - if she becomes a danger, or starts involving the kids - consider a restraining order (you might already, considering that she has threatened to involve the kids? - see what your gut tells you.) . I'd maybe also preempt, and talk to the kids calmly, saying that this woman is a bit confused at times, and might start saying mean things about you, or them, If she does they should just come to you and tell you - you'll deal with it....
Adda - your post shocked me so much I had to take a day to think it over. This ex-friend of yours is scary and dangerous. I was in a slightly similar situation several years ago. An ex-boyfriend (I use the term loosely) was trying to get custody of his stepkids, and I knew VERY well that he shouldn't have custody of any kids, ever. You get my drift. It was my word against his, and he had a lot of friends. But I had to come forward and testify against him, because no way was I going to stand by and let him get those kids. Their mother was incompetent, and he was counting on that.
I was afraid he'd kill me, ruin my reputation, etc. etc. Fortunately, it turned out that a lot of people in the community knew exactly what he was like, and came forward to testify against him as well. He ended up losing his job and did not get custody, although he probably got visitation rights (I never found out). I'm obviously alive, although the stress nearly did me in. I protected myself by telling everyone I knew what was going on.
Anyway, all this extra information is leading up to this: A lot of people probably already know how crazy your "friend" is, and they probably would side with you. People are never as blind and ignorant as they seem. She might say whatever awful things she wants, but it won't stick if people know her to be a liar. You might confide in some trusted people - I don't know if they would be friends, parents, counselors, whatever, to cover your butt.
Also, don't talk to her anymore, period. Remove her from your Facebook page and all social media. Don't answer her calls or texts. If she's trying to seduce your boyfriend she is one immature @#$#, and it's likely she's trying to seduce her other friends' boyfriends too. She may be a victim of violent sexual abuse and she's acting out. You really need to cut her out of your life as much as possible and not let yourself react to her insults. Easier said than done, but I've done it, and it works. I've had so many so-called friends (and boyfriends) like that, and it feels so good to just chop them out of my life. When I have time to think back on it, I don't feel sorry for them, and I don't feel guilty. There is a difference between a good person with problems, and a sociopath like this girl.