When naming son #2, it seemed like whatever I suggested, DH didn't like. I suggested one name and he said no b/c it was the name of a son of some random business associate. Huh? So I suggested another name that I'd always liked. The problem was that it was the same name as our neighbor's son from his first marriage, who would be about 10 years older than our son when he was born. Neighbor's son lived about 4 states away with the ex-wife, and only visited a few times a year. Say the kid's name was Gavin. After the first incident with the random business associate's kid, I said 'look, their Gavin is only with neighbors a few times a year. I'm not going to discard the name just because neighbor's son has it. There's an age difference anyway. It's not a big deal.'
So we have our own Gavin, who is now 12. Neighbors ceased being our neighbors when our Gavin was about 4. And during the few instances where the two Gavins were in the same place at the same time, it was simply, 'Big Gavin' and 'Little Gavin'.
When I told the neighbors about the name, I just said that I'd always loved the name, and didn't see a problem b/c their Gavin didn't live there full-time. They were cool. And it was no problem distinguishing which Gavin either of us were talking about.
As they say, your friend will get over it or die mad. If she ever brings it up again, I think you should look at her incredulously and ask her if she's STILL mad about that? Really? And then point out all of the other things that pps have mentioned.....you mentioned it first, so SHE actually tried to steal it from YOU, she's not even pregnant, etc.