Gnu: I don't blame you for being upset about someone telling a tale about you that wasn't true. In fact, I think you would have been within your rights to demand to know from whom she heard the story, and to whom else she might have told it. Then you would have been within your rights to track down each one of those people and set them straight—or demand that the original tale-teller do that. No doubt this would have been very embarrassing to the tale-teller, but so be it. Such people deserve to be embarrassed. Of course, you might have good reasons not to want to carry it that far.

But before I can agree with you that "gossip is never okay" I have to know how you define gossip.

Is it gossip if it's true?
It it gossip if it's true as far as it goes, but it leaves out some extenuating details?
Is it gossip if I truthfully tell you about something I personally witnessed?
Is it gossip if someone I trust tells me he personally witnessed it, and I believe it and repeat it?
Is it gossip if someone tells me they read it in the newspaper, and I believe it and repeat it?
Is it gossip if the information is not particularly damaging?
Is it gossip if you don't know the person I'm talking about?