Well at the end of all this years later and all, the title insurance company got involved and they found that the the amount of property that was in question was worth about 100 bucks. Haha. We're selling the house now and the title company paid for the re-drawing of the lines due to the fact that this should have been taken care of before the original purchase.
Nice that this somehow all worked out with us spending 0$ and the silly people that own the property spending thousands on surveying, wasting money on a lawyer, hiring a real estate agent to sell their worthless property that has been on the market for 3 years now and wasting their time harassing us(including reporting us to the county for bs building code violations that led to nothing). Now the house will sell for a pretty penny and we know there are no property issues that will get in the way. I guess in the end they did us a favor...
I guess the lesson here is don't be a dick when you don't have to. If they had instead just come to us with their issues and offered to sell us the property we would have bought it, they would have made their money and been done with it. Instead they decided to play hardball and force us to pay their insane price for the property and they will get nothing. The county wont give them permits to build on it, put a septic on it or even put a driveway on it. Ouch. But they did pay several thousand dollars to buy into the water agreement in our neighborhood, so they can water their acre of poison oak and fire-hazardous fallen trees if they feel so inclined. We even just found out that their realtor dropped them as a client because they wont reduce their asking price.