@Ryan-From-Suiteplace0 I'm just trying to get a feel for what's going on here based on what I can see in your listing, because your description has a lot more to say about your toaster than it does about the actual property you're on. The listing does not make any mention of the fact that it's in an "apartment block." The one external photo shows what looks like it could be either a single-family house or a duplex, but there's no caption to clarify what it represents. To quote your listing directly, you say:
"It’s all yours. The entire apartment."
With this in mind, I can see how someone would get the impression that they were renting the entire building shown in the photo, and be unpleasantly surprised to discover that it was actually an unsecured apartment block. You say it's a "safe neighbourhood," but to me that sounds like a dog whistle. I've felt comfortable on the streets of some of the most statistically dangerous cities in the world, and had some of the most harrowing experiences of my life in affluent suburbs - your personal feeling of how "safe" the neighbourhood is will not be a comfort to someone who doesn't derive a sense of security from being in a 96% white suburban neighborhood that happens to look very much like the places our most tabloid-famous serial killers came from. If your guest was a single woman, you might especially want to consider that the mainstream concept of what makes a neighborhood "safe" doesn't tend to account for the intimidating behaviors women have to deal with in every class of neighborhood - next time you visit the building, try to put yourself in the position of someone who was being followed on the street by someone with unsavory designs on your precious orifices, and ask yourself if you'd feel safe walking into a ground-floor flat of an unsecured building.
If you're not in a position to install an external lock, I would strongly recommend explaining in your listing description that the apartment is in a shared building, just so nobody is unpleasantly surprised that they're sharing an entrance. This guest could have asked more questions before booking to make sure she understood the setup, but I think it would be fair to recognize that you've somewhat oversold the listing and papered over the cracks a bit. One mantra that you hear a lot in hospitality is: "undersell and over-deliver." That's how you get a satisfied guest. Maybe your strategy is a bit off.
I suggest granting the full refund and considering it the cost of a learning experience. You could try to fight it, but I don't think you have a winnable case against someone who claimed to feel unsafe and misled by your ad.