My gut told me that I needed to ask the belligerent tenant to leave asap (I am very accommodating to tenants' needs, but this woman also had some mental problems). 

People who wait until getting evicted before moving have a victim mentality.

Also, tenants with a chronic mental illness are permitted to have emotional assistance animals." --- NY Civil Rights Law § 47.

Hi,I am a 26 yr old who has been diagnosed with a mental disability.

I don't know why, but mentally SFR's SEEM less risky until you buy your first apartment.  

It's not his mental illness that is a problem.

(I say this as a lawyer who deals with litigation day in and day out)  It's clear that both of your hackles are up and this slugging it out over $1500 bucks seems like a waste of time and mental energy for everyone. 

The items that itch at the back of my mind like a mental sliver can all be classified under the heading "What If.....". 

Put your mental energies to something else.

Both real estate agents  as well as my wife and I are starting to question her mental health some.