All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.
We cannot decisively assert that this woman is jealous of you or that she gives your children the evil eye. However, we have previously clarified in Fatwa 128834 the prohibition of thinking ill about Muslims without evidence. Also, we have clarified in Fataawa 85883 and 3273 how to seek protection from the evil eye.
Hence, we advise you to always protect your children from the evil eye [by reciting Athkaar, i.e. rememberance of Allaah] and conceal their good features. You should not be suspicious about this neighbor, and you should be keen on being kind to her.
Ibn Al-Qayyim said: “Among the treatment for the evil eye and seeking protection from it, is to conceal the beautiful features of the person who is feared to be affected by the evil eye with something that would prevent the evil eye, as Al-Baghawi said in his book Sharh As-Sunnah that ‘Uthmaan saw a handsome boy and he said: 'Blacken the dimple in his chin so that he will not be affected by the evil eye.’”
Allaah Knows best.