AITBF for cutting off a friend

So I had this friend in my circle and she told some of my friends and I that people took and posted nudes of her on social media and she was being harassed by the same people. We felt horrible for not noticing that this was happening and tried to ask her some more questions about the matter. Her responses happened to be different for everybody and there were many inconsistencies in the stories she was telling everyone. We decided to ask her to clarify what was going on and she freaked out and said some questionable things like "I just wanted to scare you" which made me feel very iffy about the entire situation. A few days later she came to us and said that her brain was playing tricks on her and she didn't know what she was saying. She started trying to explain what was happening more but seemed completely certain that the nudes were shared of her still. One particular friend of mine alongside myself continued to question her and then to other people i know, she accused us of taking the photos and sending them in group chats - which we would never do. This rumour began circulating around and almost everyone around knew about it. This girl continued to be in the same spaces as us and tried to start up conversations but frankly I felt so awkward, I didn't know what to say. On top of this, she has been sending me some very cryptic messages. Some distance between us was definitely created but now she's trying to close that gap and act as normal. When I asked her about the rumour, she blamed it on her mental health and said she knew nothing about it yet I know how much she spread it. Some of my friends say it's not her fault whatsoever and we should forgive her and others are incredibly mad and say there is no excuse for what she did and we should cut her off completely. AITBF for distancing myself and not wanting to be close friends with her anymore after what she did. I'm happy to talk occasionally but I have a lot of things going on and my mental health isn't particularly great either especially as I know lots of people are murmuring about me and making assumptions that aren't true. She's also diagnosed with no medical conditions and I don't actually know if she is experiencing anything or making things up for attention.