I went through a phase like this, brought home a goth girl who was into witchcraft, went goth for a while ...

(but that stopped when [you'll all get a laugh] I went out in my usual attire... big black boots, black stockings, long black goth skirt, long sleved black shirt [it was summer, I was hot, i didn't tell mum I was hot but she p*ssed herself laughing because she knew I was lol] and really black eyeliner ... I had even put talcum powder on my face to make it very white ... anyway, we were in Kmart, and I was looking at some clothes, when a kid of about 6-7 walked around the corner, stopped dead in his tracks, looked at me and screamed at the top of his lungs and ran to his mum saying there was a vampire in the shop!!!!!!!!!! I love kids, always have... and scaring that kid scared me!!!!! I didn't dress like that again, funnily enough!)

... anyway, I went goth, had a gf who was into witchcraft and anything... I admit, I allowed myself to be lead and manipulated, but I think the best (i.e. most uncool at the time) thing my parents did was research withcraft with me... a bit like you! Not just saying "ok dear" but actually sat down and read it with me, and explained everything, beliefs and rituals and lifestyle... they even started to talk about it with my gf at the time, which was rather embarrassing (I think that was their point) and ask why we decided to do this and not that in relation to witchcraft, explaining traditional origins.

So for all the effort of trying to shock my parents, I only managed to shock a small boy, which horrified me! My parents were as interested as I was about finding out about it, only they made sure I realised what 'it' actually was, instead of the modern 'teenage' version that was very attractive to us at the time...

Did that make sense? I think you get it, and I think you're doing the right thing. It sounds like she REALLY wants shock value or a conrfontation, for you to put in some 'rules' (i.e. no, you can't practice Satanism) so she can break them IYKWIM? Not that you should say "no you can't"... just describing what I think was so attractive to going goth (and being a rebel [without a cause] ) for me at the time...