If the only defect in her prior deed (which should have been a quitclaim deed to you) was the absense of witnesses, then after 2 years, the Validating Act, Conn. Gen. Stat. § 47-36aa (A)(2) might apply making it valid. You should ask your real estate attorney about this.
What rights does she really have? This question has a complicated answer that depends on the way you hold title together, and whether there is an agreement on how income and expenses would be divided between you. If there is a divorce decree, that may impact the outcome. Either of you would have the right to file an action to partition the property, a part of which would be an accounting of how much each party would be entitled to after a sale. The general rule is that everything is divided equally, however, that may be modified by a divorce decree, agreement, or the facts and circumstances of the case. If one person lives there and the other does not, the the one living there benefits from use and occupancy more than the other. In that case, the one living there might owe 50% of the reasonable rental value during the time they lived there to the other. On the other hand, if the mortgage were a purchase money mortgage, and one person was making the payments, that would go on their side of the ledger. The same for taxes, insurance, etc. You really need to speak to your attorney about all of the facts and circumstances surrounding your ownership of the property.
The quick fix would be if the Validating Act applied, or you pay the $8,000, or negotiate a lower amount. A partition action would take a long time, and would involve some expense (attorney's fees, appraisal, title search, State Marshall fees, Court filing fees, etc.) I'm not sure why she would be responsible for the loss on the sale, but in a partition action, the loss would be split between the two of you. Seriously, talk to your attorney. Good luck.
I would add a few suggestions, although if you have a real estate lawyer already he/she may have already thought of these:
validating act (as mentioned)
between grantor and grantee even a deed not properly witnessed may be valid - the witness requirement may be designed to protect third parties
if there was a divorce the decree may control who has title and the deed may have been just to implement it
is there any liability on the part of the "mortgage company" that did not have the deed properly witnessed?
it is quite possible your own attorney has already thought of all of these ideas. It appears your ex- may be simply trying to make a few bucks now that you need a new signature. As to responsibility for the loss, doubtful (just as much charging for the rent).
This information is provided for educational purposes and does not constitute legal advice, and no attorney-client relationship is formed. You should retain an attorney to receive legal advice on your particular situation.