im wondering if a letter from a solicitor will either deter her or drive her forwards to be more hurtful. I was looking more for something that shuts it down entirely.
Unfortunately there is nothing you can do to 'shut this down entirely'. You can only attempt to deter it by seeking (or threatening to seek) redress.
A solicitor's letter might have the desired effect, but you know her best...is it likely to change a lifetime pattern of behavior? Or is it more likely to pour fuel on the fire and be used as 'proof' that you're out to make her life miserable?
It’s very frustrating but also I do worry because I work with dc, reputation is everything.
This is obviously much easier for me to say than for you to do, but you need to put your emotions to one side and treat this as an entirely separate issue.
If she's making false statements that have damaged, or clearly will damage, your professional reputation, this is a serious matter on its own merit, and you should take legal advice just as you would if it were anyone else.
You may have a claim for defamation. You can also report someone deliberately making false statements with the intention to cause serious harm to the police.
the advice about saying oh she’s mentally ill is good actually. I will say this if anyone tells me.
This is not necessarily good advice. Knowingly making false statements about someone's mental health in a way that could harm their reputation or cause them distress, is considered extremely serious defamation if proven.
Even if someone does have a mental health condition, sharing this private information without consent as a means of disparaging, discrediting or humiliating them could even qualify as a criminal offense, depending on the context and severity.
I cut her off and moved far away. I cut everyone off that can ever get any gossip back to her.
I'm a bit confused here. You say you've moved far away and cut everyone off, but you also say...
It’s a small town though and everyone knows everyone...I don’t want it to get to a point where people don’t trust me after hearing what she’s saying.
Are you still in the same town? That's not moving 'far away', especially as you say it's a small place with a tight community.
If someone doesn't care enough to get your side of the story before deciding not to trust you, then you don't need their trust. You'll never stop people gossiping or taking sides; if you can't come to terms with that then leaving is the only option.
If you have moved 'far away' then I'm not sure how you think she's going to turn people against you or impact your professional reputation, unless she's stalking you?
I heard she grabbed on to one person blubbering about how I’ve ruined her life, her own dd how could it come to this.
If you're still hearing stuff like this then either you haven't cut the necessary people off, or you're still choosing to actively engage with the gossip. If you don't want her in you're life, you need to be clear with friends and family that they're not to mention her around you under any circumstances. You need to enforce that rule, and stick to it yourself. You need to be willing to walk away from anyone who doesn't respect it, because if you're hearing things about her then she'll be hearing things about you.