So you had her for about 7 months, and your friends had her about 5 months, if my math is correct? Is she back with you for good now?
She probably was just playing too rough with the older dog who growled and Chloe gave a "warning" bite. If they were in a pen together, then neither dog could choose "fight or flight"...so fight was the only option. Hard to tell if no one saw it.
You may be able to "condition" your cat not to run. There are several good articles on "Introducing a cat to a dog" on the internet. Basically, you need to keep them separate until they get used to each others' scent. Your cat needs to have a safe place to escape. You might want to use a door stop on the bedroom, so the cat can get in but the dog can't. Slowly, slowly get them in the same room with human supervision so they can look at each other, but not chase. Once you're comfortable enough to let them both free in the same room, don't let the dog chase the cat. Hmmm...let me see if I can find a good link to a detailed article.
This one is pretty good (but you can find more articles with a quick search):
http://www.hawaiianhumane.org/animal...dog_to_cat.pdf
I kept Charlie in his kennel when we were inside (not outside playing) for several days in a separate room, then kept him kenneled and opened the door so the cats could come sniff but knew he couldn't "get them". After about a week, I let them meet "face to face" and corrected Charlie for being too excited. Lots of praise and treats for being calm around the kitties. Nice to know the command "down" while the cats and dog learn to coexist peacefully.
In terms of other dogs, a good obedience couse will get Chloe around other dogs in a controlled environment and will benefit her, you, and may even be fun for a couple of your older children to attend with you.