I've just caught up with this again after losing it for weeks - so sorry he's still caught up with this utter loon.
I have zero sympathy for her. She treats him like a pet - he must be loyal to her, and only her. He is not to have anything for himself or by himself - she must have complete control over him and his life.
ANYONE "competing" with her (you, the female teacher) as support for him must be eliminated or "beaten" - hence the note with her gift. A gold chain, in this instance, is highly symbolic of the hold she has on him.
I am sorry for him. VERY. I do not see how he will be able to extricate himself yet because she still has too much pull, too much influence, and he still worries too much about what she will do to him, and to herself.
I have no doubt that she threatened him if he went out for dinner for his birthday with his family - how that would be disloyal because she couldn't be there, so unfair, he's choosing you over her (despite the quarantine - of COURSE he should be sitting in his room pining for her, not going out and having a good time without her, how dreadful that would be! 
).
I'm appalled at the school for replying to the abusive witch in an email - how bloody dare they include her! they are now complicit in the abuse, by accepting her power over him. I would tell them this, too!
I don't know if you are able to go into the school yourself - bloody lockdowns and covid are making it all very difficult at the moment - but in all honesty, I would try. Try to see his principal, or head of year, or at least a senior teacher who knows him and show them the text messages. Show them the attitude she has, and that she believes she has more responsibility for your son than YOU do.
I know that there is a lot of weirdness going on in schools over here at the moment in certain situations, but even so, they can NOT take HER word for anything over yours - that's just hugely negligent of them.
The school counsellor also needs a bloody good kick up the arse for even SUGGESTING that That Girl should have sat in on ANY chats with you and your son about his future - that's basically GIVING her the feeling that she has rights over him and his future, what an almighty fuck up that is!!
Your son is also likely to have reacted badly to having opened up to you in any way - he doesn't want you to know how bad things are, really, because he is probably in that teenage state of knowing that he's fucked things up royally but he can't POSSIBLY get his parents to deal with it for him because he's too old for that! He's not, of course, but that's how the teenage brain functions.
Hold the line - you're still doing the right thing with parenting him in terms of his behaviour towards you but also reassuring him at all times that you do love him and will have his back, and have HIM back, any time he wants.
And do not reply to any communications from ANY of her family. They're all crazy, or colluding with the crazy, and should be thoroughly ignored.