I have nothing to offer about the shady behavior from the lady that had the mare, but about the navicular, I do have a comment.
First, while some factors that pre-dispose a horse to nav. Problems can be genetic-such as large body size with dainty legs and smallish hooves, or a horse that is heavy on the forehand naturally...most of the time, navicular problems will be created or exaccerbated by poor trimming, shoeing or even husbandry (meaning the caretakers don't do a good job of preventing thrush that can create a vicious cycle of ouchy feet that leads to compensating movement that can build up, over a long period of time, to navicular symptoms). Poor trimming, esp if shod, can create contracted heels, which can also lead to nav. Syndrome. My feelings are that many horses that have it, do because of error on the part of the farrier or caretaker more often than the result of conformation.
All that being said, unless she's truely an exceptional mare, there is probably little to gain by breeding her right now, and would probably be cost DEficient compared to just buying a nice, young prospect.