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Paul N Henry is right on the money. LW almost certainly going to find herself out on the street, soon. Meanwhile Olga will probably get a promotion.
How do I know? I was in a very similar situation, except that in my case it was a subordinate who, among other things, brought in a knife and threatened to kill me. When I complained to HR, I was told that it was my problem, and that they'd like to fire both of us - we were, in their precise words, "as replaceable as used tissues, and worth about as much".
I'm not dumb. I quit within the week. My subordinate got my job. And I'm pleased to say that that firm recently went out of business. Now I work at a place where I actually get some respect (plus the work is much more enjoyable and pays better).
Sorry to go on like that, but the thing is, it's really obvious: management is NOT going to do anything about Olga, period. Maybe she gives really great blowjobs. Maybe she has photos of top management killing puppies, or Enron-izing the pension fund. Or maybe she just has a sparkling personality. In any case, it couldn't be clearer that she is in for life, and that LW can only be destroyed if she keeps this up.
To be honest, I'd says the odds are good that it's too late for LW to do anything to save herself; she's likely to find reprimands being entered on her work record, and her next annual review will probably be her worst ever. She's on her way out the door.
She has my sympathy. And a suggestion: shut up about Olga at work, take up whatever stress management techniques work for you, and get your resume up-to-date NOW. For your kids' sake, if not your own.