Did she sign the contract and return it to you? If not, then I think you will have to return the deposit. This totally sucks I know as these people completely led you on showing no respect for you or your business. If I had not received a deposit and signed contract at the May 8th time line I would have said good bye to them. This is very telling what type of clients they would have been. Royal pains in the a$$.
I have learned (through my own mistakes) that if someone wants my daycare, there will be an immediate signing of the contract and deposit paid. No wishy washy stalling tactics while they look for relative care!
Good luck filling your summer spots hon.