Pathological lying isn't usually considered a feature of Schizoaffective Disorder. You mention Bipolar Disorder (which is a different illness) and lying can be a feature of the manic state of BPD when people become disinhibited and grandiose. Lying can also be seen at times as part of Attention Deficit Hyperactivty Disorder or Obsessive Compulsive Disorder but not so often that it is considered a major feature of those illnesses. When lying occurs as part of another illness (like the ones I have mentioned) then the aim of treatment would be to treat the illness and expect the lying to reduce as the illness diminishes. For example, if lying were to occur beacuse a person with BPD was in a manic phase then you would treat the mania......and expect the lying to reduce when the mania resides.
There is no well known or well accepted specific treatment for pathological lying but there are two major therapies that could be used in attempt to change the behaviour. Psychodynamic Psychotherapy generally aims to help people to uncover subconsious conflicts or processes that are impacting upon present life and so a Psychodynamic therapist would look to possible repressed conflicts that might be contributing to the lying. Cognitive Behavioural Therapy (CBT) generally seeks to use emotion, cognition and behaviour to achieve change. For example, a CB therapist might try to use the way a person thinks and behaves to change how they feel. In the case of lying a CB therapist would look to work with any thoughts or beliefs that might be contributing to the behaviour of lying.
So, if you were seeking to help a person who is having difficuly with lying the first thing to do would be to encourage them to seek appropriate tretament for any disorder that might be causing the lying (for example, Bipolar Disorder). If the lying was not really being caused by a specific illness then the next thing to do would be to encourage them to consult with an experienced therapist (CBT or Psychodynamic) who treats pathological lying.
I'll pause here and wait for any repsonse you might have to what I have written so far.
If you believe you have seen a significant change in behavior corresponding with the introduction of a medication (or even a change of dosage) then the first thing to assess is whether it is in fact medication related. The range of more subtle and unusual side effects to psychiatric medications is enormous and while I haven't previously heard of this a medication related side effect I wouldn't for one minute think that it wasn't possible.
It sounds like you have a good deal of insight into her situation and it would not be unusual for a person's confidence (and thus assertiveness) to diminish as a consequence of pharmacological treatment. Certain anti-depressants can actually induce suicdal ideation so it's no such a stretch to think confidence might be diminished by certain drug processes.
If the lying is fear based then I would suggest CBT might be a good approach to try. Fear is inherently a cognitive process (intense negative interpretations about potential future events) and as such would be amenable to the CB method.
Putting all this aside, my suggestion regarding how you handle her lies on an incident by incident basis is that you should handle it the way you would with anyone else. I understand that confronting her may cause her distress but I wouldn't expect this kind of confrontation to induce a psychotic episode unless she is in a very, very fragile psychological state. If she is...then she needs a review by a more senior Psychiatrist for an alternative treatment approach.
How would you handle this situation if psychiatrc illness wasn't part of the picture?
Very good idea trying to get in touch with NAMI, I often suggest people use their resources.
I'm a CBT therapist so I'll just make a quick point about working with potential fears;
You need to try to determine what her assumptions are about saying no to/disagreeing with someone. If the lying is occurring as part of a passive communication style then the assumption will likely be along the lines of 'potential rejection'. If the lying is a reaction to the expectation of rejection then what you could begin to do slowly is to reassure/convince her that you will not reject her regardless of whether she lies or not. No easy task!
Also, if it is the case that you have seen a change corresponding to a medication change then I really do strongly recommend that you have her reviewed.
If you have further questions or would like me too clarify or elaborate on any part of my answer please let me know and I will happily respond. If not....I wish you the best of luck!