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First, Cary, gotta share the love for Stanley Bing, whom I discovered a while back but haven't read lately. Thanks for reminding me how great he is. With a name like that I was sure he was some sort of rich-kid asshole, but his columns are clever without being glib, and he just kind of makes you feel better about the bullshit.
As for LW, I can't tell if her lies and politicking directly affect you or if you just know she's in everyone else's business and you hate watching her operate. If she's not wrecking your work, suck it up and ignore it, and do your job. If she's gossiping to you but not about you, nod and smile and get back to work.
Do you like the work, but hate your boss? Try to focus on that.
I would caution against just quitting. Many hiring managers have a thing about hiring the unemployed, curiously. It always looks better when you are working for someone; you are proven to be able to hold down a job, if nothing else.
Good luck!