@MorbidCynic: Muscle has a higher density than fat, this means that with less volume you can have more weight. Yes, pound for pound it is the same. But you take 3 ml of fat and 3 ml of muscle the muscle will weigh more.
What she is saying is right. If you are building up muscle while losing fat your weight won't change and there is nothing wrong with that. Health has a lot more to do with body weight concentrations or fat percentage than it does with your actual weight. So keep exercising and eating a healthy balanced diet and I think you will find that your energy levels rise, you sleep better, and you feel more focused.
On another note, make sure you are getting enough sleep. You also might want to increase your calorie consumption slightly, up to 1400-1600 to make sure that you are getting enough nutrients. It is better to eat healthy and slowly lose weight than it is to try and cut fast.
Keep in mind that a woman in your age group has a base calorie consumption of about 1800 (Base meaning without doing anything) so this means that if you are working out you will be burning significantly above this. Probably to the tune of 2300. You do need energy to keep going.
