L.S.
You have done the right thing and have set some very healthy boundries. I strongly urge you to take solace in that fact.
The behavior of your former friend is not surprising, most people know what they are doing wrong is wrong when they are doing it and are just in denial and feeling guilty. When some one tells them their behavior is wrong, like you did when you said no, that person is often on the reciving end of all that guilt which comes out as anger.
Tell your daughter that when people are behaving badly we don't play them or hang around them. You are setting the stage for later in life when she is around friends who decide to drink, do drugs, or any other bad behavior you do not approve of. It is import for her to understand that every adult is not always doing the right thing.
This is an opportunity to teach her to walk away away from those people who want her to do things she is uncomfortable with.
As for your friend, she will quickly find out all about the kind of person her new boss is and if she is siding with her then she is also not the kind of person you want to be around. You will make new friends.
This is a blessing in disguies.