I believe the challenges that are given to us by others are there to force our hand in some way. It can almost be like 'Okay, I'm going to challenge you now, so show me what you've got'. From personal experience, I've found that it's easier in some ways to remain that nice non-confrontational person but, in the long term, easier doesn't always work. Basically, if we're being challenged to evolve and we chose not to move forward, the outcome can be painful.
I am learning that many of the confrontations I face in life are less about confronting others and more about confronting myself. I'm sure you're familiar with the sort of internal dialogue which goes a little like this:
'Say something, c'mon, stand up for yourself!'
'No, I can't. What if this person stops liking me. What if my friend deserts me or my partner leaves me, what am I going to have then? Nothing but some form of hardship.'
'Just do it! You know you want to! You'll feel better for it.'
It's pretty confronting, hey! Yet, it doesn't even come close to the confrontation that follows (if we don't meet the challenge on offer):
'I can't believe you didn't stand up for yourself! What's wrong with you?! You're hopeless!'
I believe that whilst it can be somewhat fearful to confront someone who challenges us, this action is what frees us from ongoing internal confrontation. Imagine how you would feel if, the next time this woman came over, you left the room and returned with some carpet cleaning products saying 'I've tried to get out as many of these stains as possible. I thought you may have better luck. I'm sure you didn't mean for your dog to leave them. I've considered a carpet cleaning service but I can't afford it'.
Whitewolfwarrior, whilst you are obviously a kind, considerate and thoughtful person (with a deep desire for change), this woman who challenges you does not sound quite as evolved as you. It could not hurt for you to challenge her in relation to her being more kind, more considerate, more thoughtful. I believe you would be doing her a favour in regard to her evolution. Needless to say, she may not see it this way :)
Take care and accept the challenge