Hi,
Sorry you're going through this!
I was in this spot once... I was the new Dept, manager, and I had NOTHING to do, because, just like you said, the old one could not let go. Management was no help at all, and I got tired of bringing it to their attention.
I quit. I don't recommend it. (I tend to make snap decisions when I'm pissed off! LOL!). The benefit package was a really good one. I wish I had just TAKEN my job, from her, in the same way she was preventing me from doing it!
Anyway, I bet you're great at the job. I hope you hang in there, she has to give up sometime! LOL!