I would say that if this has been going on for 2 years then it's a little late to start putting down rules now. I know that sounds rude but if, over the 2 years that they have been playing together, you have seen this girl to be mean spirited, manipulative and cruel and you never did anything before...why start now? Because she stole something? I would think the other character traits are worse but that's just me. I am guessing that since the item in question has been returned, the grandmother (is that who brought it back?) is probably mortified and embarassed. The stealing might not happen again but the "mean girl" behavior will probably stick around. I would, instead of banishing this girl from your home at this point in the game, maybe take this opportunity to tell your own kids that there are people like this in the world and they need to be mindful of it...teach them how to be a good judge of character at a young age. Let them decide if they want to be friends with someone like that or not. That will be something they will need and use their whole life long.
Ask yourself, "When Iím on my deathbed, will I be glad I was so serious about _______?" Let down your hair and stop being so darn important for a while.