The retirement/financial independence equation he uses is a paid off primary home, 500k in liquid assets (usually retirement, cash, and after tax brokerage account), and more than 1 source of income (part time job, real estate, social security for those of that age, dividends, etc.).

Now, instead of getting the deed and who knows what additional costs I will have to pay to initiate these auctions, I would have to bid against the public and pay more money to win the deed.

I am familiar with the "rudeness" but that unfortunately is not so uncommon when dealing with government employees who have to deal with the public on a daily basis and is something you just have to have thick skin for.

A non-resident alien for tax purposes is a person who is not a U.S. citizen and who does not meet either the “green card” or the “substantial presence” test as described in IRS Publication 519, U.S.

Even if this isn't true, why have there been no publicized efforts to even challenge the law?

Have to know when to say no to someone. my Dad who taught me how to sell real estate and work with the buying public always told me Son your an independent contractor you choose who you work with not the other way around and the most important word is NEXT. 

Most 100% lenders will lend at 100% UP TO 70% ARV, which is tough to secure.

Any advice on how I go about securing financing for less than $100k?

You typically don't want to do any renovations before the 2 years is up...just basic safety and securing the property.#4. 

She only received social security income, no other income.1.