How do I know it's time to get help from someone else?

She probably is trying to get rid of the company -- and it's working! She may be jealous of the way they are treated or perhaps she wants some of her own company? Anyway, why is she in the room with the guests? Why not let her spend this time in her room? (With entertainment, food, her own guest [or sitter], or whatever is needed?)

Was she always like this? It's possible that an antipsychotic medication - at a low dose - might help. Tell her doctor what's going on, but not in front of her. For your sanity, assume that this is not satanic possession, but the disease process.

Can you prepare a close friend with a good sense of humor, and invite them over and have a conversation with her about why she says these things? "Mother, how do you know that? Was it in the paper? You know that's not true. Are you saying that because you want them to go home?" As long as you are totally embarrassed, she has the power. If you can learn to laugh it off, she might stop. "You'll have to excuse mother, she's always reading those tabloids and believes every word!"

Does it happen when someone stays "too long?" If she has dementia, she may be able to keep up a good show for a while, but then she gets tired. Try shorter visits, or try suggesting that she go to her room or watch TV or something relaxing for her.

Try real hard not to be embarrassed, because it is the disease. Your friends must know she's losing it, and if it were happening to someone else, you could laugh at the story. Try real hard to have compassion for her while you try to stop this behavior, because her poor crazy brain has some good reason for doing this. She's not trying to be evil. It's the disease.

Has she been diagnosed with anything? How old is she?

Sounds like you may want to consider an assisted living place, perhaps?

Tell her that her remarks are totally rude and inappropriate and that if she continues to say such horrible comments, you will place her elsewhere.