Any resolution to this?

If you join this covenant, all the human enemies in that area will stop being hostile to you, and attacking them will count as a betrayal for the covenant. So, yes. However, this covenant is not that great, and most people join it to kill Shiva's bodyguard (won't spoil why, go at it yourself). Good luck.

Pretty sure she tells you that it's a myth when you first meet her but it seems like a way of making you turn away at first, but turns out she was right.

That's your problem. You need to spray her with a spray bottle.

I shot her in the *** with arrows.