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I know she still see's me as 12 years old (I'm 63), and last time her hospice physician came by I heard her telling him all about something I did when I was in the second grade!
I've found I've just had to let it go at this point. She isn't going to suddenly become aware of who's who and what's what at this late date. Sometimes you just have to accept what is and roll with it. If it gets to be too much, I'd just leave the room (and often have). Taking a breather helps, as does trying to think how I'd react if I was the 86 years-old and it was one of my children trying to set me straight. That usually makes me rethink my words. :)
avidreader, I think you are either going to have to develop thicker skin, or stronger boundaries, or maybe some of each. Either that or reduce the amount of exposure you have to your mother.
She may try to treat you as if you are 12 years old, but she has no power over you. What is she going to do if you keep hanging around with your "unsuitable" friends -- ground you? You can do now what you looked forward to being able to do when you were 12 -- live your life the way you want to, and just brush off her advice and suggestions if they don't suit you.
People where you volunteer are taking advantage of you? "You may be right Mother, but I really like being there, and I'm going to keep it up. Let's talk about something else now." "Mother, I agree that losing some weight might be good for me, but it isn't something I'm going to work on now. Let's change the subject, please." Etc.
"Mom I'd like to have lunch with you after we finish our errands, but let's agree not to talk about what is wrong with my life. I just want to have a pleasant break. Is that OK?"
And if all else fails, minimize the time you spend alone with her.
Then, do it.