Difficulties

I am having trouble dealing with someone in my office. I find this woman extremely difficult to interact with. She changes moods constantly, at times treats me like I am 5 years old, and seems to feel that if she was in charge of everything then the office would run perfectly. She also talks about our boss behind her back, saying extremely negative things about her, like that she is mentally ill and a control freak. In general, I find her to be a very negative person. I am not the only one who feels this way about her, my office-mate has confirmed that it is not just me who feels like she is negative and hard to deal with. The problem is, I have read numerous sources that say that when something bothers you about another person, it is often reflective of problems you yourself have. So I wonder if the reason she bothers me so much is that I actually have many of the traits I have a problem with in her. I work very closely with this woman, so when I first started my job, I befriended her and became close with her. The problem was, it was too close and I found myself engaging in behavior and loshon hara that I didn't want becoming something I did with ease. So I distanced myself, and now don't speak of personal issues with her. But this seems to have hurt her, and she now lashes at me unexpectantly. Dealing with people is something that I am usually reasonably good at. I don't think there are that many people out there who dislike me, and I try not to give people a reason to do so. So that is why I wonder if the reason I have trouble with this particular person is rooted in my own issues. Or maybe she truly is a difficult person to get along with. I guess the real issue is, how do I deal with it? Do I continue as I have, and just keep my distance as much as possible, considering we work in the same department and do have to interact on a regular basis? Or do I try to say something to clear the air, and if so, what do I say without attacking or making it extremely uncomfortable between us? And if my difficulties with her stem from problems within myself, how do I recognize that and make changes in myself? I try so hard to be a kiddush Hashem, because for most of the people in my office, I am the only Orthodox Jew that they know. I worry that if my interactions with this woman are something she see in a negative light, she will judge all Jews by that standard. I feel tremendous pressure by that. She has told me that she finds me judgemental, that she is "not going to hell" for her actions, and I try to tell her that I am not judging her, and I would never think she was going to hell, that is not even part of my thought process, but I don't know that she believes me. And maybe I am being judgemental, I probably am. But how to handle it???