An old woman talking with an evil spirit,new best friend...

Perhaps you have an evil spirit hanging around you. It may be a witch's familiar. Maybe someone has put a spell on you, or cast a curse. You should try to get the evil spirit removed if possible. Your mind was so disturbed it tried to shift to something it liked, somebody it trusted for comfort. That's called lucid dreaming. It's your reaction to seeing an evil entity in your dream, kind of like an immune defense kicking in. You should practice lucid dreaming until you are good at it, to avoid nightmares in the future.