I's so sorry you two have had this happen to you. It must be an absolute nightmare. The lesson is, of course, to be very very careful who you give details to on the internet.
That said, the real question is how to proceed now. From what you have said, my guess is that this person is an "oxygen thief". She craves attention of whatever sort, and so long as she has that she will continue to thrive.
It will be difficult to restrain yourselves, I know. But SB, cut the bitch off.
Just ignore her. After awhile she will take her act elsewhere.
I know nothing about the legal aspects of this. But I really would just ignore her. Sure, make sure your friends understand what's going on, but apart from that just drop it. Anyone with one iota of sense who sees a vicious online profile will have their doubts about her anyway.