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If the tracking says it was delivered, then it was delivered: you have fulfilled your half of the agreement. If it was stolen, then a police report needs to be filed. If the post office will pay out on the insurance claim, then you can refund the buyer. Do NOT refund the buyer before you have the insurance money in hand.
Do not give her a refund. The PO is not going to magically find the package, because she is lying about not receiving it. If she REALLY hadn't received it, she would have contacted you months ago. She is just trying to take advantage of you. Ignore her and block her. And don't feel guilty--it's perfectly okay to think badly of people who are trying to scam you, lol!