Asylum

Clarifications

Elizabeth's stay at the Asylum and encounter with the demonic spirit that had been tormenting her throughout the entire story was actually the effect of her mind playing tricks on her in attempt to distract the female from the events that had really taken place.  She had been dead the whole time, as discovered in the later chapters. Elizabeth killed herself due to being driven insane from her mental illness. Her "mother" and "sister" who are present with her in the story were two anchors created by her mind in order to try and help her grasp onto what she thought was her deluded real life when in reality, they had been dead the entire time. Elizabeth killed them before killing herself. Chapter 8 states that she has disturbing images of the demonic entity stabbing Anabelle in the chest and throwing their mother's body in a lake, these were flashbacks coming to haunt and remind Elizabeth that she was the guilty culprit who did this to them. The spirit that had been following her was her consciousness, attempting to get her to realize what had actually happened so her soul would be able to somehow rest in "peace". 
In a turn of events though, life seems to have given her a second chance at the end of the story, placing her in the body and life of another (unknown) girl that resides in the same town as her former self.