Hi! I'll be glad to be of help with this issue.
I can imagine how frustrating and confusing this situation must be for you. You are clearly a caring and loyal friend. I understand: knowing her since you were teenagers makes it very hard to just say you've had enough and move on and forget about her. On the other hand, as the years go by, she is not getting better; she's getting even worse because the stories/lies are piling up on top of each other.
Let me answer the question of how to decide for sure that she is a liar. You are correct that you are emotionally very close and so it is difficult to make such a judgment based on your own experience. Your experience would indeed be colored by your close friendship. But you twice mentioned the reactions of other people who have had dealings with her and people in general, their reaction to her. And in both instances you recognized their judgment to be that she cannot be trusted in what she says. This is the evidence that you need to accept from the outside to confirm your own experience.
Interestingly, I just finished a month ago working with a man in my office who came with the same problem (in major respects) to therapy. His wife met with me first so that I could hear the symptoms from her perception. And he wold do the same thing as your friend, create grandiose stories about himself and events in his past that did not occur. Why did he feel such a need?
It was a need my client had to create an image of competence. What do I mean?
If you look "as a psychologist would" at what you wrote to me, you will see that every story she makes up that you mention has a common purpose: to avoid criticism, to look good in someone's eyes, to seem important, to be the woman she thinks you'd want her to be, etc. See the problem that is emerging here?
That problem is one of not feeling able within herself to make herself be the person she thinks everyone wants her to be and that she wants to be. So she creates two types of stories. One is to inflate herself; the other is to excuse herself (illnesses, diseases, bad husband, etc.) Yes, it's a self worth problem. In my client's case I mentioned above it did indeed relate to his youth experiences. In fact, my client was bullied (not sexually) very much in middle and high school.
We don't know what caused this incredible self worth problem in your friend. It is very extreme, sounding even more extreme than this client I told you of. And we know that it formed early for your friend: you've known her since adolescence and it was already well into formation then. I can't answer whether you should refrain from having sustained contact with her for your own wellbeing. That is a possibility and I would certainly support you in such a decision. But if you stay in friendship with her, I urge you not to try to take on a therapeutic role, not to try to help her solve the self worth issue. It is way too deeply ingrained in her and you will start feeling used and burn out over a period of time.
Okay, I wish you the very best!
My goal is for you to feel like you've gotten Great Service from me and the site. If we need to continue the discussion for that to happen, then please feel free to reply and we'll continue working on this. If the answer has given you the help you need, please remember to give a rating of 5 (Great Service) or 4 (Informative and helpful), or even 3 (Got the job done) button. This will make sure that I am credited for the answer and you are not charged anything more than the deposit you already made by pressing any of these buttons. Bonuses are always appreciated! If I can be of further help with any issue now or in the future, just put "For Dr. Mark" in the front of your new question, and I'll be the one to answer it. All the best, XXXXX XXXXX