(((hugs))) You can't argue with stupid. I have this problem myself I am fairly certain Thomas Paine said "arguing with someone who has renounced the use of reason is like administering medicine to the dead"...she is going to keep being crazy but you can only control YOU. I hate to say it because I can hardly do it either but just ignore her. sorry!!!! (also I dont have any valium but if I did I would send some your way

BMs really do flush down the pan once skids turn 18... this too shall pass, believe it

Well this has been a waste of resources so far. Lets try and help:

I wrote this a long time ago and I hope this helps with your problem. It may not reflect your exact situation but you'll get the idea:
The situation with my step-kids finally got to the point where I decided that my efforts to raise them was futile.
First I told my wife in private what I was going to do and why.
Then I stopped investing myself, time and money in their upbringing. I realized that by conscious choice I could cease being responsible for them or their actions. Neither would I take credit for how they turned out, good or bad. I simply stopped interfering in their lives. This is not to say if they would start a fire on the living room floor I would not intervene. But if they did not do the laundry as scheduled I ignored it. Nor did I do any of their chores. If the trash overflowed in the kitchen - well tough. Mom dealt with it when she got home.
You will be absolutely amazed at the look on a kids face when s/he realizes you don't care enough to even tell their bio-parent they did something wrong. And you'll be amazed at their future behavoir and attitude towards you.
I stayed friendly enough and taught one how to drive when she was old enough. But they could no longer blame me for the consequences of misbehaving just because I saw the misbehavoir. I never told. If they were caught in a infraction it was not my fault. They began to realize that they were responsible for their actions because of what they did not because I caught them.
I would talk to my wife in private if I had issues, but once she made the decision I backed her up 100%.
Once the kids realized I was no longer the ogre they thought I was their attitude changed. I was not their friend, but neither was I the enemy. They came to realize that I had not done those things to irritate them. They in fact missed the things that they had come to depend on me doing. Permission to go to the mall when their Mom was not home? "Sorry, can't do that".
Their mother slowly came to realize that I wasn't overreacting to their actions. In fact I wasn't reacting at all. She came to understand that she would have to control the situation and she did.
With that things got much easier around the house.
Billions of kids grew up in the world without help from me and turned out just fine.

I have SDs17 and 15 and their Bowel Movement I refer to as NPD BM - you as a budding psychologist will understand the ref to Narcissistic Personality Disorder. She has behaved like a total maniac for last 10 years since I came into DH's life and activated her psychosis.
It has been the hardest thing about being an SM - dealing with her. I don't even deal directly as my DH handles all the interactions with her - I have caller display on our landline and never pick up if she rings - and she does not know my cell no. I disengaged from her daughters 8 years ago.
I advise you to do the same - and also if you are able to prescribe - a repeat prescription for valium lasting until the SKIDS are at least 20.
Also - you may find this article on disengaging worth reading - http://www.steptogether.org/disengaging.html
I would also recommend getting a copy of the book Stepmonster, by Wednesday Martin.