hi H&H,
This is certainly a challenge for you and you can look at it as an Opportunity for Growth, and to hone a new skill (positive) rather than as a royal pain in the ass!
I've had many of these "challenges" myself with coworkers in the last year...so I know how hard it can be setting and keeping boundaries with work hogs at work.
Here's what you should do to start:
write down your work goals. Start with the few you've already mentioned:
1. I don't want to end up leaving my job like that other guy because of this person
2. I want to keep doing what I've always done
3. I want work to be enjoyable and fun, not a constant battlefield
4. I want to make money for the company and it's shareholders, be a productive team member, keep myself and others employed, this to me would be job satisfaction..
etc
OK, now that you've spelled out your goals and it's clear you're not out for power and one-upping like She is, you can clearly go to your management with your objectives - and start going to bat for YOU. One thing I've noticed about companies is that they are in the business of 1) making money and 2) keeping people employed. They are not in the business of feeding someone's personal agenda/ego. So as long as you keep your sights in mind, you're contributing and she is not. What do her power play moves say about her?
a) she's insecure
b) she feels inferior to you
c) you are threatening to her, that's why she has to be involved in everything you're already doing
Refer back to Your job description, goals, and duties/responsibilities often. Ask to meet with your boss regularly to go over these, if necessary. Ask: how does this person fit into my goals and objectives? In most companies, employers legally cannot deny an employee this right, to define their goals/objectives/job duties - it is harassing behavior not to tell people what is expected of them and to base their promotion in the company, raises, secured employment, etc, on anything but these job descriptions, goals, documented duties, etc (in a very subtle form). Fall back on this frequently if you need to. Does your company have published policies in place? You can remind this women if she seems to be violating them. For example, the company where I work has a company policy that "we will treat suppliers, customers, and fellow employees with respect, allowing them to do their job to the best of their abilities and thus having the integrity to do ours." If this woman is constantly pestering (ie bullying) you, how does this support the companies policies. You can go talk to your HR rep (non-threateningly, by yourself) to get clear on any policy you're not sure about. I would talk to your boss at a minimum and clarify what he/she thinks about this. IT is being proactive, and you're putting the idea in their head, that if they don't do something to address this woman's behavior, you're thinking about taking the matter to HR next, and what would that say about their managerial skills. Isn't one of their duties to take care of these kinds of conflicts? I've found management and HR to be both extremely supportive of Problem Resolution where I work. Why? They want to keep good employees (it's expensive to have high job turnover), they don't want to have to resolve conflicts through the legal system after an employee leaves dissatisfied (also expensive), and they don't want to go against their own policies - they want to do the right thing. Policies are created for a reason and that is to protect All employees.
under no circumstances is it wise to play her game, your job is to set boundaries/limits, and remove yourself from her game, else you're stooping to her level and are no better than her. Why should the company keep you, you are wasting their time.
good luck, I think this challenge will be a good one for you. you can do it

pb