@Eric6715 Wow, people are getting creative in the quest for discounts. Did she send you any visual evidence of the condom actually being on the deck or just claim that it was there?
At any rate, there isn't much you can do in these "he said she said" type situations. If she elects to bring the claim to Airbnb, with photo evidence (stagged or otherwise) they might be inclined to offer her something. If it is just a verbal claim, you can stick to your guns and refuse the hefty refund or offer a discount on the cleaning fee.
Things to consider as you navigate this:
-Did she notify you immediately so there was opportunity to rectify the situation. Ex. Sending back out the cleaners. Or did she wait till the end of her stay to notify you?
-Was there any video or photo of the said item? For me personally if I walked into a rental and found a used condom I would document it.
-Is it part of the normal routine for your cleaners to check the deck/patio? If so, this is something you could bring up if the claim is escalated through airbnb.
If you are trying to mitigate a negative review, guests like this usually leave less than favorable ones regardless. It's unfortunate that we encounter people like this, but almost ever host does at some point in time. Your place looks really nice, hopefully you a smooth airbnb journey from here.