Well, you could remind her that at the very least, some 10 MILLION people have played Dungeons and Dragons without any mishap, mental illness, religious crises of faith, or trouble with the law. The number is likely even higher than that, but that's a conservative estimate). You can note that some 2.5 million people play role-playing games of all sorts on an at-least monthly basis, with lack of same.
You can inform her that D&D players are scientists, pastors, doctors, lawyers, educators, blue-collar and white-collar workers who enjoy D&D and other similar games like some other people enjoy NASCAR, extreme sports, or stamp collecting. The only difference is that stamp collecting hasn't been given a bad image by shoddy reporting. (EDIT: I don't miss the irony that I originally misspelled "shoddy".

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The U.S. military has D&D players in all positions and walks of life, and many CO's don't mind it because it and many similar games (wargames, but you don't need to specify the similarities) are good thought exercises for people to engage in. You could bring up the old story that in the 1980's, there was at least one D&D group on every U.S. nuclear sub! However, I only have Dave Arneson's word to go on that.
Roleplaying (the major component) is used in business management as a regular tool for crisis training and conflict resolution.
The game itself has no elements of actual satanic appeals, rituals, magick spells, or other information therein; not even a pentagram in sight! Tell her to look on the
www.d20SRD.org site if she doesn't believe you.
The best thing to do in the end, is ask her what info has she heard (actual info, not hearsay) that D&D and roleplaying games in general are Satanic. Asking for actual proof will often defuse the situation, or throw it back on the source of her information - a pastor, a TV personality, or some other source of authority. If the source of authority is only making vague claims of proof, and you are sitting there with links to sites or actual books proving that the truth is far different from the claims, you go a long way to defusing any criticisms.
Finally, remember that OJ Simpson and Michael Skakel each played Golf, and were either accused or convicted murderers; by extension, Golf causes people to commit murder.
(That one you might want to hold back as a last resort.)