We also no longer have the cash to rehab this ourselves.We explored tearing it down and selling the lot, but the lot comps in the area are very weak.We can get foreclosed on, or close at a heavily reduced price and refinance our personal homes to meet the payoff amount at closing, but we are trying to exhaust every option before doing either of these things.Is there any other option I am not exploring here?

These units come with their own intake and exhaust pipes and the existing condition of your chimney wouldn’t matter.

Improper venting would probably not  directly cause corrosion, but could cause exhaust gasses to build up in the structure - a very dangerous situation. 

;) not only that, but i researched this situation to exhaustion across multiple lenders to see their individual interpretations of said guidelines.

According to my record and receipts, she owes me $10k for over payment and for supplies, which according to her contract, she was suppose to cover.I always hear how these things can be emotionally exhausting, and also she has no money anyways -- she doesn't have money to eat.

What you are describing is exhausting on staff and crews. 

I'm too far in to give up now, but feel like I've exhausted all my ideas. 

When I was in your shoes back in 2019, I ended up going with Rent to Retirement after a pretty exhaustive search and vetting process of turnkey companies and I couldn't be happier. 

The second floor bathroom exhaust fan appears it may venting into the attic space and needs to be re-routed to the exterior."

Investing with a short term view can be costly and exhausting.