hi ray; i am so horrified to read this thread that i just had to post. firstly to say that you seem to have been very restrained in your handling of this situation. well done for that.
while i ag0r0ee with the sentiment of many of the replies here, i actually dont think that getting tough is the right approach. it doesnt seem within your nature.
can i suggest that you dont get drawn into the facebook, proof of purchase/existence of the docking station. i think it is a red herring and unless it is going to change your decision to pay up, i cant see the point.
i'd also suggest that you ask your sister to meet you tomorrow and for her to bring along the alleged owner of the item. it appears that she is being pressured by that person and in turn you being pressured by your family. i think it best that you speak to that person directly, rather than a chain of middlepeople.
the issues surrounding the ipod thing and your family are clearly complex, but i think best dealt with as separate issues. that approach may help you to focus in your discussion about the ipod thing and to clear that up. thell your sis simply that you havent seen it and you bear no responsibility for its disappearance. do tell her of your discovery re the money and ring and that you and your dh are discussing how you will deal with that.
the issue re the birds, her 'right' to have had a party, your family's treatment of you, facebook deletion etc must clearly be discussed, but at another time. i dont think its appropriate for you to take any of those issues up with her while she is on her own. id say it should be with your mum alone or in a group setting.
i suggest that you tell her in clear terms that you do not want to be contacted about the ipod thing again - by anyone. state clearly that you will not entertain or participate in any more discussions or other about it. then leave it at that.
i too have a family who rally round one of my siblings and leave me out in the cold.
sadly, i have also been the only uninvited sibling to a restaurant dinner. i found out while they were all getting ready. i was in the house with them. when i spoke of my surprise at being excluded much mumbling and excuses ensued. yet still no-one invited me along. i feel your pain. so sorry you are going through this. all of it.