Help with my employee

This is a long one.  Basically I have an employee who works for me and has ZERO respect.  If it was up to me I would have fired her a long time ago.  However, my company keeps putting off even having me write her up.

It's extremely hard to deal with, and I'm nervous that she'll try to complain about me to HR or something so I am keeping detailed notes of the issues.  Keep in mind she also will only meet with me when she has a notebook in her hand to write every word I am saying.  I will say "Hey Mary, come in my office for a second I want to find out how your meeting went" and she will say "Let me get my notebook".  It's extremely unsettling.  I've explained to her several times that I will not tolerate this behavior and she'll reply "are you done?".  I'm a very nice person and I look out for my employees, but I refuse to be treated like crap EVERY day.

For a quick explaination we work on providing services to employers that are available to them to help train their workers and increase their income.  Through grants, etc.

Anyway, here is the journal I am keeping with her behavior notes.  If you were me, what would you do?  (It's about three pages in word, so I appreciate anyone who reads through all of it)

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In September occurrences began sporadically where Mary was extremely uneasy about her duties. She would complain that she hasn’t had formal training, doesn’t understand her job, and feels she was lied to or “fooled” into this position.
I have sat down with Mary separately to train her in anything she has let me know she wasn’t comfortable with. I have set up trainings with her to sit with Ed, Keith, and Bill as well. She will attend the training; say she has no questions and then the next day complain that she hasn’t been properly trained. She has said in meetings in front of the staff that she doesn’t believe anyone knows the contract well enough to train the BSR’s properly, including myself, Randy, Barbara, and Keith. She has stated that she cannot do her job or be flexible with the transitions right now because “nobody knows what she is supposed to be doing”. I have always explained to her what she should be doing. Answer any questions she has, and then she will claim again that she doesn’t know. I’ve allowed her to read the contract, I’ve read through the contract with her. 
In late September when *** asked us to fill out the Monthly Projections report I felt it was necessary to call in the team and go over the numbers. This way I could make sure they were comfortable with them, knew what was expected of them, and avoid any surprises for them or myself. One of the subfields was how many new businesses they would be calling/contacting per month. I stated that I was going to put 30, because 10 new calls each per month should be very easy for the BSR’s and the bare minimum to require new business development. Everyone agree except Mary.  She felt the number should be more like 3-5 calls per month, per BSR. I explained that with these numbers we would rarely get new business to work with us and that even the 10 calls each rep could probably accomplish within an hour’s time. This became a big issue and our meeting was stuck on this topic for approximately an hour. Mary would not accept 10 calls in an entire month for the minimum projection. I stated that while I care about her input I couldn’t make it any lower, and had to ask several times that we move on. BSR’s should be able to make 10 calls per week easily, so I was very surprised that this turned into such a passionate subject for Mary. She consistently berated me in the meeting and how there are unfair standards. I did ask politely how 10 calls within an entire month can be too high of a standard. She did not answer me but continued to roll her eyes, tell me I’m wrong, breath heavily and make it noticeable that she was unhappy with the decision. Ernie, Manny and Naomi all separately explained to me later on how frustrating it was to have the meeting disrupted over this. 
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Early October Mary bumped heads with me a lot about contacting hotels. She claimed that she didn’t know how to explain our services to hotels and refused to try and close deals with the one she has built a relationship. She stated that *** keeps changing our contract so she wants to stop meeting with employers (despite our goals) and only meet with Training Providers until she has a good understanding of their classes. I explained that we don’t have the time to allocate so much into these training providers and how we don’t know if we will always be dealing with ITG’s so it may be a waste of time in the long run. To try and limit her efforts to about 25% training provider calls and meetings and 75% employer meetings, unless an employer has agreed to move forward and we need specific courses worth spending large amounts of time on. Especially if it is for one person, she would meet with the training provider first and sometimes this takes half of a day.
Whenever we meet or discuss these matters Mary gets very defensive, and I have to avoid bringing up anything about her work. I cannot even make suggestions without her becoming extremely hostile (rude tone, rolling eyes, laughter). Sometimes I ask a general question or how her meetings went and even that makes her uneasy and defensive. The other people in the office have complained about this moderately, but more commonly Naomi since she has to provide some service to Mary and feels challenged by her at times. That is when I decided to keep a timeline as her first review approaches.
 
10/14/09
I was out of work sick, but taking calls from the staff. Naomi called me complaining that Mary opened up my confidential mail and handed out paychecks without checking with myself or anyone else. Naomi did not want anyone who wasn’t HR or a manager handling her paycheck. So I called Mary and asked her if she did in fact open the paychecks without my approval and hand them out. I calmly asked that she please not do this again, it’s not okay to open up anyone’s confidential mail without prior approval from them, and why she did this without asking me? She was obviously annoyed that she was being corrected and replied “okay” so I said “Okay?” She said “Yes okay, I won’t do it again”. She often doesn’t answer my questions but replies with a sharp comment or one word answer instead.
Additionally, she emailed ***(our contractor)**** over my head with questions that would pertain to a different department . Many of these questions I’ve answered in the past. It causes a lot of confusion and made *** slightly uncomfortable as they’ve repeatedly said they would like one contact.
10/15/09
Had a talk with Mary regarding her attitude in the workplace and directly toward me. I explained that I care about her (and all of the employees) happiness with this position and the core values of our company. I exclaimed that I am here to help her and not to look at every comment or question I ask like a personal attack to respond with an “attitude” or in an extremely defensive manner. She admitted that she is not following the values of smile and support. I asked her if there is anything else I can do to help her here and she said “no”. I asked her if she had anything to explain about why she behaves this way and she said “no” and I explained that we wouldn’t get anywhere if she continued this behavior. She simply responded “okay”.
 
 
10/19/09
Door closed all day. Called to answer a question sent via email and no response, was on another call and never replied. Emailed her to call me back. No call. Finally I call her to see if she got an answer regarding expense reports and she briefly explains what corporate told her. I asked if they basically said the same thing they told Ernie last week (reports being processed). She paused and snarkily replied “I have two reports, he had one”. I stated “I was just asking so that I know how the process works and that this is in fact the regular turnaround time”. Her reply “okay, are you done?”. Mine “yes, thanks” and she hung up. Every question is an issue and defensive with hostility. (FYI: Ernie submitted just as many reports as Mary so it’s an identical situation.)
 
10/20/09
10am - Called Mary yesterday and today in her office while she was on the phone, and emailed her asking her to call me or stop in my office (because her door was closed and locked). She admitted to seeing my calls and my emails and not replying. She left for a meeting without ever checking in with me. I was not saying this in a corrective tone, but just very conversational.
1pm - Mary sent an email to me stating that “students” from a school were being sent over to see her about getting enrolled in a program. So I asked her if they were students or employees somewhere who want to enroll in our program? She did not reply. So I called her said hello and she does not reply. So I ask if she is there, she says “yes”. I said that I just want to make sure any referrals we’re getting through a school, if someone hears of our program from someone who works at a school or if someone hears of our program through other students in a school we need to make sure that we handle it ethically and do not take them into the program without contacting the employer to offer them services (If the employer is in our allowable fields) and place them in a course of their choice and not one from that specific school. Otherwise it can seem unethical. She said “okay” and I said “okay thanks” and she hung up. It’s a very cold and rude interaction every time. It is an extremely unproductive, unpleasant and hostile environment for me or anyone else dealing with this treatment to work in.