I don't know how to handle her and her lies anymore!

First of all, trust is very important to me in a friendship. A friend of mine, who is in her mid 20's, is a HUGE liar!! She tries to avoid conflict or make herself look better, but she still lies. For example, the things she lies about include: at her job she lied and said she had a boyfriend. (They were giving her a hard time about being single.) So she took some guy's picture from her social networking place and told them she was dating him- when in reality it really is some exchange student who went to her cousin's school- my friend has NEVER even meet him!! So she has to lie about having a so-called "long distance relationship" with someone she has never even met! She always has to make excuses for not being able to go out. (She can't just say she doesn't feel like it or she has other plans.) As for lying to me, I found out that she wrote an e-mail to me from my friend's account because I was worried that the friend would be mad at me, so my friend tried to patch things up because she was tired of me worrying about it. I asked her about it and she looked away and changed the topic. She regularly even admits that if one person doesn't make an excuse, she'll be like, "Oh they should just lie and come up with an excuse!" She encourages lying! Like she doesn't even know the difference. Maybe she just is trying to avoid conflict or something, I don't know. But I don't know about our friendship any more. (I could provide more examples, but this post is long enough!) If I call her out on it, she'll just get all upset. I don't know how to handle her and her lies anymore!

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