renter signed lease and changed mind-give $ back?

[Marci Stein]

After seeing house twice, signing 1 year lease, tenant started moving things in 

and decides the basement smells "too mildewy" and not liveable.

She wants  her 1 month security deposit back. She  signed  lease 3 weeks ago . The 

dehumidifyer will cure any smell in the basement if it is on, which it has not been due to no power.

Threatening to take me to court if not return her deposit.

Now may take me months to rent out again. 

What would you do? Please help me decide how to deal ..