Keep looking and be patient :) Deals come and go, so don't let your emotions take over. 

The property won't even cash flow before counting maintenance, repairs, management fees, or vacancy.It is a 1962 ranch 2/1 with under 800 sqft (less likely to appreciate than a larger 3/2+ or even 2/1.5)It was flipped at the height of the bubble (generally meaning lower quality work)IMO I don't think you would even consider holding on to this property if you had zero emotional attachment (including having that 2008 purchase price anchored in your mind).  

you know, i've noticed in the last few months as a wannabe real estate investor, that simply taking action is better than reading about taking action. the more you know the less you will want to continue your real estate adventure, this conflict of wanting to be and wondering whether to quit will be emotionally draining.

If you're looking at a property as an investment you can't let it become an emotional decision. 

But all emotions aside, you did bring up my biggest concern.  

See if their style of business, ethics, emotion, personality, and manner match what your are looking for.

Falling in love with a property will make you emotional and investors don't make decisions off emotions if they want to actually make money in this business.

She came back with a first emotionally plea and then of course the blackmail with accusing us of letting them live in a house with mold and her children getting sick from it and she having to take them to the hospital.We have always responded to all maintenance complaints in a timely manner and also addressed the rather small mold issue (water leaking through the side of the back door, replaced the whole door).Now, where do we go from here?

Do you have an emotionally mature, adult relationship with her that could survive a $45k loss?

Some landlords get very emotional and offended easily.