This may not be what this lady you described has, but it sounds close…
There are children who are so abused and/or neglected when they are younger that they cannot trust, lie constantly and often attack those who should be closest to them. They are unable to form an attachment and often seek “revenge” on the adults in their lives who represent their parents who initially abused them. When adults, these people still seek revenge against the “parents”, by making an adult representative of their parents and attacking them. So a husband might make his wife a “mother figure” and also attack her, either by lies or in other ways.
The problem comes in that they can’t receive kindness as such, but are hurt by it and have to destroy it. Any good, such as a hug or a gift, must be twisted to fit their needs or it is actually physically painful for them. A freely given gift would be broken, a hug would physically hurt unless the event was initiated by them to manipulate the other person.
Is it a mental illness? The condition I’m referring to is more of a learned conditional behavior that turns into a mental illness. It’s a coping strategy developed when neglected in youth. Since they didn’t get the nurturing they needed they learned to “not need it” and filled the void with something other. Unfortunately that other is so twisted that the human mind cannot hold it and it breaks down into other disorders (mania/multiple personality/psychosis/etc). This isn’t to say people with these disorders were all abused, but the abused tend to get the disorder because the coping strategy is so destructive to their mind.
Are they responsible for their evil actions? Only the Lord truly knows that. I do know that the actions they commit are choices they make, but they are making the best choice they can see to make. They are choosing a good for themselves in the same way the drug addict chooses the cocaine as a good because the emotional pain and withdrawal is too horrid to deal with. But then, there is also the question of the first sin that sent them down that path, are they responsible for the choice they made in childhood to cope in such a destructive way? I’ve left it up to the Lord’s mercy in the cases I know of.
Are they truly incapable of remorse–thus they can’t repent? Little children feel no remorse or even shame before the age of three. At three they begin to feel a shame in the effect of “I’ve been caught so I feel shame.” It’s not until they reach about the age of seven (age of reason) that they begin to feel true remorse. These stages only come about if the child has been properly taught and disciplined during the early years. If there was never a bond with the parents then no shame can develop for being caught and therefore no remorse. These people are stuck in a perpetual state of pleasure versus pain. It is painful to do what I don’t want and pleasurable to do what I do want, therefore anything is justified to get such. As for repentance, only the Lord knows that as only he can bring their hearts the healing they need to truly repent if they are in fact responsible.
Are they then just perpetually damaged children? Yes, but they must desire healing on some level in order to be healed.
As for healing, if children who have this are caught early, there is a good chance at recovery if given the right treatment. They must learn strict obedience to a caregiver to learn that their needs will be met without manipulation. They are basically stripped of all control and are given it back as they earn it. They thus learn to trust the caregiver again. It’s a boot camp philosophy, take away all control, build a bond and trust, then give bits back as earned.
When they reach teen years however it is more difficult to do this stripping since they are “independent” and hold onto that control more. An adult would be in a difficult situation, they would need to be inserted into a boot camp type area for an indefinite period of time while healing took place, if that person allowed healing at all. It becomes a choice to stay broken, again like a drug addict who chooses the drug over the cure because the cure appears more evil and horrid.
Could they be possessed? While I can understand the belief that possession might be there, there are specific criteria for determining a demonic possession. First the person must have a knowledge of something they shouldn’t (a language they’ve not been taught, or something hidden – psychic abilities) Second they need to have superhuman strength and third, they must have an aversion for religious objects. When dealing with a child a thought was possessed it helped to remember this, thus the demon talk was nothing but memories of horror films she’d seen.
I hope this helps, and I will also pray for this lady.