Many thanks for your kind words, Stephen. Much appreciated.
We have had a personal crisis of a totally different kind here at home so I have not been blogging for a few days but here is an update.
We have decided to sell the flat to one of those people that buy at a discount in exchange for a very fast sale. I have been in discussions with a chap who is interested and it looks like things are starting to move.
He made us two offers: one price with J out altogether (which would mean we couldn't sell for weeks) and another offer (obviously less!) with J still in and he will take over the eviction process from where we have left off.
After much discussion, we have decided that we will sell the flat with her in and let him have the hassle of taking her to court and getting bailiffs involved. Yes, we will get less for the sale of the flat but weighing it all up, we feel it is something we need to do. With our other crisis to deal with, J and her petty, pathetic games are the last thing we need.
He WILL continue to evict her as I have been totally honest about the situation with her and he doesn't want her as his own tenant. His aim will be to clean the flat up and put a tenant of his own in there. So J will still end up homeless.
Financially it is probably a necessity too because since the Housing Benefit stopped the rent, we have slipped behind with the mortgage. Arrears have built up and with the threat of repossession, it makes sense to sell. We will have some equity so won't be out of pocket. We just won't make as much of a profit as we could have had we sold it tidied up. But when we weigh up the court costs of removing J, it evens out along the way.
Funnily enough I phoned the Housing Benefit people and told them that J was definitely still in the flat so now they have agreed to restore the rent. How bizarre it all is!
It is my hope that the sale will proceed okay. The buyer seems a decent enough guy so I'm not worried about him backing out. But I am worried about the survey that his mortgage lender will obviously require. Since J has 'trashed' the flat, I am scared that the surveyor will not recommend it to the mortgage lender. But we will have to wait and see on that one.
As the sale is supposed to go through in about a month, I hope this ordeal will soon be over.
And I can reveal J's name to the world.

Sorry to hear about your other difficulties.
The potential sale of the flat sounds promising even if it's not how you would have planned it when you started off. I'm looking forward to hearing further good news in your blog in the coming weeks.