What do I do about this person stealing my pics and passing them around?

[Taika]

I would've told you to get your revenge and humiliate her but it seems she's doing a pretty good job herself. I think what you're doing is perfect, you're not overeacting or acting like a bad person so the only possible villain is her and you're the innocent victim that everyone will stand by.
Ignore the crazy girl, eventually, she'll realize that she's all alone and it's her fault.
You don't need any crazy people in your life and to avoid having her steal your photos make them private for you and your friends. You could also tell your friends not to share any if your information with her.

You said no one except relatives was at her son's party... There must be a good reason she doesn't have friends, and now you know what it is.
Unfortunately, after you post something on facebook it's legal for anyone to use it unless its for an 'ad' and without your permission (example: putting your picture drinking coffee on a billboard as a commercial for the coffee) it says so in the 'million page' terms of use for facebook
Since that woman has no friends you have nothing to worry about right? No one will listen to her. Just stay away from her and her strange family.

It's sad to see grown ups act like such children! There are some strange people on the world.

Hope I helped!