Alright, techinical explanation...
Some NPCs in this game have a flag which prevents their HP from going below one. Rejeik is one of these NPCs. Tanova is not. So what I'd suggest you do is use negative plane protection on your best fighter(s) and mop the floor with her, along with her vampire cronies. The reason she's beating you is because she's level draining you to the point where you have about six hit points. Negative plane protection stops that, and it's a low level priest spell. Now, you realise that vampires can't be killed unless you stake them, so killing her in the middle of the street doesn't mean she's dead - the cloud of mist floating away from her dead body should give you some idea of that. Okay?
Oh - if you haven't paid Gaelan, you could always just tell her you're not working for the Shadow Thieves and avoid the encounter all together.
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