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As to the rest of your post, I think that absolutely sucks, living close to a crazy person. There’s no sciency somehting-phobia word for this, but I have a fear of crazy people (and mentally slow people). If she really does the things she does I believe she should be put away in an asylum. Hmph. 
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I believe that the mentally absent must be mainstreamed and not be locked up. They are mental, but they do have feelings.
Also, if you don't like mental people, stay far, far away from Ossett. My cousin Trudy has Trisomy 21 (Down Syndrome).
As for the topic, I say the woman is either trying to purposely attract attention, or she really is a nutcase. I think it would be best if she temporarily was locked up - I emphasise the word 'temporarily' - then mainstreamed. Then she should just be down to the level of moderate to her problem. It really sounds as if her problem is severe.