I'm sorry this woman upset you so much. It sounds like you were being very reasonable.
As other people have said, the fact that your friend has two healthy dogs from this woman does not necessarily mean that she's a good breeder. How old are these dogs? Many problems don't show up until the dog is 3-4 years old.
Also, re: price. I don't want to pry into your finances, but if you can't afford a normally priced pup, are you confident that you can afford a dog, period? Especially if it needs a lot of medical care?
You might want to consider getting a rescue, since the prices aren't so high, and you will be giving a dog a second chance!
If you are willing, maybe you can post the information about the breeder here, or PM someone with the info, and they can check it out. I personally would not be able to tell you definitively if it was a good breeder, but other people here would.