I would start looking for another job, but don't quit your present job until you get hired somewhere else first. As the saying goes, it's much easier to find a job when you already have one. It sounds like you would be much happier if you found a job closer to home. It may mean that you may have to wait on some things that you mentioned in your blog, but what's more important in the bigger picture, putting up with the coworker from hell so you can save up money sooner, or you being not so stressed out about work and you have to put off those plans for a bit longer.
It also sounds like that manager you talked to has no backbone at all. Walking off the job pretty much anywhere is grounds for termination on that alone, so I don't understand why this manager won't deal with this Coworker from Hell. If CWFH throws a hissy fit and walks off the job, then so what? She has grounds to terminate this person's employment.
Good luck with whatever you decide to do.