If someone gives you a gift for which they paid nothing, do they have any right to demand a gift in return?

5 years ago, my sister-in-law gave us a Chihuahua that was in desperate need of a home. She called us and asked if we wanted the dog, we didn’t even know she had the dog. We bred the dog and have an extra puppy for sale (because the other sister backed out of buying her 24 hours before she was supposed to take possession). She is practically demanding that we give her the dog because she gave one to us.
Firstly, the dogs belong to the owner of the girl we bred Turd to. It is not my say who gets the dog.
Secondly, she expects me to pay $150 to the owner of the dogs just so I can give her a dog for free.
It was always my belief that a gift was a gift. There aren’t supposed to be strings attached to a present.

Here is an excerpt from our conversation via Facebook:

Her: Ill gake her but only for free cuz I gave you yours for free.. If it wasn’t for me and Zachs fam you wouldn’t have him or the pups

Me: The price isn’t up to us. We got our pup for free as stud fee. The pups belong to the bitch’s owner, not to us.

Her: Excatly Liz you got turd for free I should get one for free!... Yes a stud fee but for you to have another and now your daughter might be getting one! Funny how now she might be getting one.. My point is I gave you him FOR FREE and you expect me to pay for one… yes its up to the other owner but you are gettin ANOTHER FOR FREE…

Me: if she gets the dog its because she is paying for it. I am not giving her the dog. I told her she has to pay because it’s not my dog to give away.
(Just to let you know, my eldest daughter is NOT getting the puppy. She can barely take care of herself let alone another life!)

How does she have the right to be angry at me because I don’t want to pay for a puppy for her so I can pay her back for a gift from 5 years ago?