Op, you're in bed and you wake up at 1:30am to find your dh and the neighbor that it seems from your posts that neither of you know too well but comes over that late to borrow a cigarette and have a 2 hr chat with your dh....no, that's not how it works, Op, I agree. I would not dream of just showing up for 2 hours in the night to "chat" with the husband of my neighbor. Ridiculous.
First of all, I wouldn't allow anyone to smoke in my house anyway, can't stand the smell, it gets on everything.
Second, she has no business coming to your house at 1:30 in the morning and staying for 2 hours with the excuse of borrowing a cigarette. From her point of view you are conveniently in bed.
If you don't nip this now, she will be a huge pain going forward. Do not invite her over anymore, that's a given. Do not let her in the house, she overstepped herself. Your dh is either encouraging her or, most likely, he is afraid to say anything to her or is so naive he is actually taking her side as you seem to suggest.
We have pretty great neighbors. None of them would come over at 1:30 am while I was in bed to chat with my dh for two hours.
She needs to back off. If she does it again, you could try telling her, with your dh beside you, that she won't be coming back to your house again at 1:30 in the morning, or at any other time.
She sounds sly to me.