racism and friends

First, I want to start off by saying a few things that I've learned from being a mother. One, when my child(ren) hurts - it hurts me more. Two, when someone hurts my child(ren) - I want to go for the jugular. Three (since my daughter is of a minority race), when someone says nasty racial remarks/jokes - I am offended (Seriously offended. 10X more offended than if something was said about me.). Which leads me to my story...

I have a friend, M, who is really nice, thoughtful and fun to hang out with. We live in the same town, our husbands get along and we have kids of similar ages who also like playing with each other. But. But, she is known to make derogatory remarks about black people (and she uses the 'N' word, GULP). Not daily, but often enough. Seriously. When she uses the 'N' word, she'll turn to me and try to explain that she doesn't feel that way about "Chinese people" just blacks. She'll then say "you know what I mean". My response is "well, ummm, no, not really - I'm not racist." This is a concept she has a real hard time accepting/understanding. In a diplomatic, but not so effective, manner I've tried to help her understand that I am uncomfortable when she uses racial slurs.

As a white woman, I have never had to personally experience prejudiced behavior. Don't get me wrong, I've experienced torment for many things as a child. I grew up (until high school) very poor while going to a 'rich' school, on a free ride. I know what it's like to be different. But, these racist slurs and/or jokes that fly out of M's mouth make me crazy. I really like this person otherwise. That must sound insane, huh.

I'm not unrealistic, I know I can't change someone else's behavior, but I'm at a loss. Our families get along, and she treats my children very well, but I'm not sure what to do. Honestly, this behavior seems so out of character for this person. It wasn't until we became good friends that I guess she felt comfortable enough to show this side of her - at which point, I liked her and her family. I mean, really, if such comments flew out of her mouth on one of our first encounters, I wouldn't have given her the time of day. But, that's not the case. I am trying to see past this. Do I just let it go?