Will Allah reward me if I give my friend money that I already know she won't return, despite her potential need, but she hasn't initiated repayment of previous debts, or will Allah hold me accountable for this money?

The questioner is not legally obliged to give money to her friend. If she knows or strongly believes that the friend will spend the money foolishly, then she risks sinning by giving her the money, due to Allah's prohibition against wasting wealth, as He said: "And do not give the foolish your wealth which Allah has made a means of sustenance for you." However, if she does not know or strongly believe this, then the default is that giving is permissible, and she will be rewarded for helping her, with the caveat that there are many needy people. As for advice regarding the friend, if she helps in obeying Allah, then the companionship is good; otherwise, she should avoid her, based on the saying of the Prophet, peace and blessings be upon him: "Do not accompany anyone but a believer, and let no one eat your food but one who is pious."