Molly Carpenter believes that supernatural bad guys only needed to think that Chicago had a White Council wizard in charge, and she declared that the city was protected territory. Supernatural things are afraid of the White Council, so the presence of any wizard in a city is a deterrent. Molly's plan partly worked. A lot of violent supernaturals moved elsewhere.
In this period, she is recovering from psychic and physical wounds from Chichén Itzá, using a cane to take the weight off the leg that was shot. Many members of the Chicago Alliance and the Paranet fear her, feeling there is something wrong with her. According to Karrin Murphy, however, she's like a battered, stained, torn-up doll. An attempt to help her results in a strong reaction on her part and failed. She is tolerated only because she is a major magical talent.
Witnesses to her actions see a tall woman dressed in layers of ragged cast-off clothing; the papers calling her the Rag Lady, after the torn rags, often out of clothes Harry Dresden wore at Chichén Itzá, she leaves on her dead enemies.
In the series
On behalf of Marcone, Childs asks Murphy if she trusts the Ragged Lady. Murphy never lets her guard down around her, but still considers her one of her own people and she won't let anything had better happen to her.
Like most other members of the Chicago Alliance, William Borden seems terrified of her. She once unleashed an illusion on him of creatures dragging him into the Nevernever, leaving him curled in a fetal position. This happened because he, along with other well meaning but unaware, members of the Chicago Alliance attempted to "straighten" Molly out.
Waldo Butters informs Harry Dresden that he examined twelve of the seventeen people killed in the last three months himself. The same cloth on the victims came from the clothes Dresden wore at Chichén Itzá. Someone took it out of evidence without being seen by security cameras. Though Murphy is pretty sure it's her, she hasn't dug into it because they need Molly as the Ragged Lady. As it happens the people were killed when Lea was the Ragged Lady, not Molly. She has made the difference between life and death for a lot of people.
Molly Carpenter tells Dresden about the Fomor servitors and the ones she's killed. She said the "odd bits" melt into jelly when they die. She said they grab children waiting for the school bus and take people out of their beds. She had to do something. Carpenter used Verisimilomancy to trick a Fomor servitor who had kidnapped a little girl and a corrupt cop who had been paid off in gold by the servitor to look the other way into killing each other. She also admits that, occasionally, the Leanansidhe impersonates the Ragged Lady in her place.