Yep - if the property were sold, she could have called Airbnb and issued you a full refund. But if the property was not sold and she said you don't qualify to rent with her - then something sounds sketchy about it.
Hosts ARE allowed to cancel a guest who does instant book if they don't feel comfortable. That includes not having an accurate photo (I can't see a face in yours), or a guest that doesn't have reviews.
But they aren't allowed to treat you the way you've been treated. Either the house was sold or it wasn't. And if it was sold - unless the person is moving in the next day - transfer to the new owner takes time. That's an extenuating circumstance and it would mean her listing was coming down anyway.
But in this case it appears she liked. And now she's gone. Good riddance!