Matt just told me that he was introduced to you through our mutual friend Herb.

Removed and redid the ceiling drywall and vapor barrier.

Don't believe me, check this out from energy.gov http://energy.gov/energysaver/articles/moisture-controlA poly vapor barrier can help in these areas as well, again as long as you tightly seal the area - around doors, windows, outlets, etc.

I get that you thought her being ok with a fix that took the electric back to 1950's level was crazy, but as an investor I thought it may have been more crazy to replace the receptacles without replacing the panel.

When I last had to replace a line set, the tech said that if the line has been open to the elements for a prolonged period of time, particularly during high humidity, that there's a fair chance that enough water vapor and whatnot has gotten into the condensor that there will be problems down the road.

If I am doing tile I just use the mortar and tile for the vapor barrieor.

The problems with this though is that with her being listed as a lienholder, the LTV will not likely be in a position to do a traditional refinance.I thought about putting the $40k in an account to season for 2-3 months and appling for a traditional loan.

Is there a proper vapor barrier or radon mitigation system installed if needed.

The tenant pays every month, I never have had to hassle her for rent, never had her be late, sometimes she pays in advance. 

I have a young child and I'm terrified of her being exposed to something like that.