Charles Helliwell's Answer:
This is a case of the 'Poisonous Parasite'; something which is sadly alive and kicking in almost every workplace you'd care to mention and has done so since the workplace was invented.
To deal with the poisonous parasite, you first have to understand what it is and where it lurks, before you can even begin to deal with it.
Dealing with it, requires you to immunize yourself from its destructive effects and then exorcise it from your immediate environment. What you cannot do is to turn it into a benign or even benevolent bug, because it feeds by poisoning and destroying its host before moving on to a new victim.
So, let's take a look at your case, where your co-worker is displaying all the key characteristics of the poisonous parasite. Since you've identified her and you know where to find her, it's now up to you to immunize yourself and get rid of her.
First and foremost, you must not allow her to see, sense or feel that her behaviour towards you is having any effect at all. It's hard, I know, because to instantly develop an apparently insensitive exterior to this person will not come naturally to you.
Nevertheless, that's what you have to do. Treat whatever she says to you as though it's inconsequential or irrelevant, which it probably is for the most part. Tell her (don't ask her) to put anything in writing - that's important.
At the same time, make sure that you follow up any verbal instructions to her, in writing. That way you have a record of it too, which can be used as evidence to support any disciplinary action which might be required at a later stage.
Never get embroiled in any email or written tit-for-tat. Ensure that you make her responsible for finding you and not vice versa, should any clarification be required.
Once again, tell her (never ask her) to put any comments or observations she wants to make about your behaviour or management style, in writing. If she wants to meet with you, make it first thing in the morning or last thing at night, depending on whether you're a morning or evening person.
Never discuss her behaviour with anyone else in the office and keep a short written record of any and all dysfunctional behaviour which relates to the productivity and wellbeing of you or your team.
Since she is looking for any means to goad you or make you look foolish, you have to be ready for her at meetings and when she interrupts, tell her politely but firmly too keep any points for the end of the meeting. The chances are she will have forgotten anyway, but even if she hasn't, make her wait until everyone else has had their say.
Be polite; be proper and be courteous at all times. When she questions why you're 'picking on her', tell her that 'you hadn't really noticed' and then tell her that if she has a complaint, to put it in writing.
Trust me, you will eventually bore her into either finding another 'victim' who she can feed off, or she'll just become more and more angry and frustrated that she's getting no response from you that she'll slip up and do something terminally foolish.
Remember, you ARE the senior party here. You've got eight years and the ear of the CEO. You would be wrong to assume that he/she isn't aware of what's going on. Your managers certainly are, because they are empathizing with you. So, everyone's looking at you to see what you're made of and how you're going to handle this parasite.
So go to it, Jane. You KNOW what's right and what's not. The solution lies not with counselling or medication; it lies with you, because, guess what ? If you allow yourself to become a victim here, you'll end up a victim wherever you go and whatever you do, because working life everywhere is filled with poisonous parasites.