Is it possible that your DM (and possibly even the woman herself) have no idea how seriously you viewed her actions? Or possibly she does not agree that whatever this neighbor did was very wrong and that she feels that one incident, when weighed against thirty years of good relations, should be forgiven and forgotten after so many years have passed? If the woman has a history of being unkind, and this was not a one-time action on her part, why is your DM continuing the friendship?
I think this is the root of the issue, and Citadelle's response is basically in line with my mom's... it's been a long time and it doesn't hurt you to be friendly/neighborly/etc. I admit that part of me feels like this is the rational response, which is why I'm grappling with this in the first place. My mom is much more forgiving and peace-keeping than I am. I do not think she will invite her after agreeing not to - she wants everyone
to be happy (but seems to think she knows how to achieve this instead of just listening to other people when they tell her that this might not be possible).
Here is what happened.
I grew up in a small town. One weeknight in the winter, I was home alone at about 8pm (my mom was due home within an hour). I got in the shower and about two minutes later, the bathroom door closed. I thought it was weird (if it was my mom, she would have said hello), so I got out of the shower and into a towel. I heard light switches flicking in the hallway, and I stepped into the hallway and heard noises from my parents' room. To get to the main part of the house I had to run PAST their room (it was dark) and into the front hall. The front door was standing wide open and I freaked out, ran across the street to friend's house... in the snow... in my towel and nothing else.
I rang the bell and I remember being scared out of my mind, my friend said I was a crying and whimpering mess. She shooed me into the kitchen so we could call the police once I blurted out that someone was in my house. Friend's mom (Mean Lady) was on the phone with a relative. She took a good look at me and said, "I'm very busy with this phone call and I don't have time for dramatics. Go next door."
So out the door we went, me still shoeless and in my towel, to use our other neighbor's phone (911 called, their daughter, also a friend, gave me sweats to change into and I waited there until my mom got home). Police verified that someone had been in the house - there were large man-sized boot prints all over the tile floors in the kitchen but nothing was missing, the assumption is that after I left the guy got scared and left, too.
My parents were very upset at how ML responded to my emergency. They didn't socialize for a long time - probably not until I was in college. I stayed friends with the daughter but did not go over to their house for sleepovers, dinners, anything - I flat out did not feel comfortable around the mom. I have never discussed this with the daughter.
I think I would feel differently had she said to me at any point - "Hey, I screwed up and I'm really sorry. That reaction was not okay," or some variation of that. We have all done stuff that we cringed at later and realized was offensive or upsetting. The fact that she has never taken the time to acknowledge this really gets to me. I wasn't a dramatic or crazy kid, I had been friends with her daughter for 10 years at that point - she knew me and my family.
In any case, I do appreciate the point that PPs have made - either my mom wants a BBQ or a birthday party, or this is an excuse for a big to-do on her part, which is fine - it's her house and I don't want to hurt her feelings either by snubbing her offer. But I think it might be best all around if I just told her I'd rather have a quiet family dinner and she can throw the BBQ of her dreams at another time.