@Crystal404 If you read both the standard and the Covid EC policies, you’ll see that illness (unless it’s proven to be covid) does not entitle them to a refund outside of the cancellation policy they booked under and agreed to. You are not required to be the stand in insurance policy for this guest
I would have instructed the guest to cancel ASAP to open up the dates, and offered to refund them for whatever portion of their abandoned dates get rebooked.
Because she now seems to have backtracked and is determined to stay after all, it’s probably best just to offer to refund in full IF she cancels immediately. Whatever it takes to get her to go away.
Do not manually refund her, authorize Airbnb to do it, upon cancellation.
Be aware that the guest can review you if the booking is still active 24 hours or less before check in.