I’m sure this is very, very difficult. I do have to wonder if it is helpful to the person for you to continue to hang in there. Your enduring support may “prove” to her that everyone else really is against her. She may have to lose everyone before she is willing to consider that just maybe the problem lies with her.
I do understand your reluctance to let go if you are worried taking distance will destabilize her. But it seems that walking on eggshells with her is destabilizing you. You are under stress. You aren’t sleeping well. Your own life is going down the tubes. From my point of view, substituting your mental health for hers doesn’t make much sense.
I wonder if there is a way for you to take distance without completely cutting off contact. Confronting her with her behavior is not likely to be helpful. But perhaps you can tell her you are going through your own stressful time just now and need to be less involved with hers.
Do consider finding a chapter of NAMI (National Alliance on Mental Illness) near you. This organization has a Family-to-Family program that helps family members of people with mental illness learn more about the illness and effective ways to cope. Most important, the classes help members become a support for each other.
I did search on Amazon and found several books for family members of people who are mentally ill. I haven’t read them myself so can’t make a recommendation but I do encourage you to do a similar search in order to find a book or two that might be helpful.
Finally — Yes. It’s likely that the counselor you saw wasn’t a good “fit” for you. It is not at all unusual for an individual to see several counselors before finding someone they feel comfortable with. That’s important. The intuitive connection between therapist and client has been repeatedly found to be what matters most in outcome studies. Do try again. You deserve the practical help and support.
I wish you well.