I say go old school and kick her butt!
Just kidding.. I had a big blowup with a friend of mine at work. You are co-workers. You don't have to be her friend. We work along side of each other fine now... we don't talk unless it has to do with work but one thing I did do was tell her exactly how I felt and that I was finished with the friendship. I broke up with her. I think we girls have a hard time remembering that friends aren't always for life. They come in and out of our lives for a reason or a season... some just stay longer than others.