Hello again all of you! i thought of writing back individually as I didn't expect such interest in my problem but i think it's faster and easier this way. First of all, THANK YOU for writing back! It makes life much easier when there's other people, strewn across the globe, going through similar stuff.
I think I agree with all of you but can't really do some of the things you suggest. So it seems like I'll have to rise above this issue and just filter her out. I have a power-point presentation of my work I'll have to hold for the dept (yikes!) and she'll be there...I am actually looking forward to it and have some quite personal and disguised messages for this person ,). We'll see how it goes. Wish I could change institution as one of you has, but it is out of the question for now.
For those of you who advised me not to take it and speak up, I actually "exploded" in the canteen queue the day after I posted the thread. She always makes sure she has the last word and disappears, so I'm afraid my bold statement about the absurdity and inadequacy of her remarks only entertained the cash-desk lady and the queue behind me (including many from our dept. as i found out later on...hmmm).
Good luck to you all and thanks for being here for all of us.:-)