@islandhoppin
I can understand the concern regarding cutting her out of my life at the moment, but honestly I don't think my MH can take a whole lot more of it.
She's worn me down, been rude, obnoxious, self centred and just all round awful to me.
I don't feel I deserved the way she's spoken to me. Maybe I'm wrong?
You DEFINITELY did not deserve the way she's spoken to you. You sound lovely, kind, empathetic.
Turn it around: if you were in her position and had asked her to take you in and she'd said 'no' how would you react? I'm sure like most decent people you'd have felt really nervous about asking in the first place (and in fact may not even have done so - because it IS a bit of a cheeky ask when there's a house available to live in). As soon as she said 'no' you would have said 'ok, no problem, forget I asked' and actually been really grateful for the offer to help find something else (which don't forget YOU offered).
You would not pile on emotional blackmail. You would not weaponize mental health problems (by the way in this scenario SHE is the one creating anxiety for you - a totally rational response to a supposed friend behaving like this - and another reason to keep her out).
You don't have to decide about the friendship now. Let your DP handle any communication with her for a while. He can say you're unwilling to discuss her request for you both to put up her and her dog rent-free for an unspecified time any more (and perhaps at the same time say it's a hard 'no' from him and every time she hassles you then the reasons for saying 'no' become greater).
Just take a step back, have a break. Maybe she is acting out of character, maybe there's something going on you don't know, but she hasn't told you and her behaviour towards you is not kind at all. Wait until the dust settles and then you can reevaluate.