Kikyo isn't actually a bad person. She and Inuyasha just hadn't had enough time together
for their infatuation to transform into true love. Also, since she was a priestess, she was
brought up to not trust demons. To her, Inuyasha is still like her boyfriend. Imagine going
on vacation, and upon your return, finding out your boyfriend or girlfriend has found
someone else, and they're cheating on you with them. You'd probably feel angry and
upset. Urasue said in Inuyasha: volume 6 "Most all of the soul seems to have returned to
that lass's body… Yet the dark power of vengeance stays behind to play in the bone and
grave soil playground I have made…". What she meant was that the good part of the soul
returned to Kagome's body, while Kikyo's feelings of betrayal were all that remained in
her clay body. Kikyo has said many times that her time has stopped. So even though she
now knows Inuyasha didn't betray her, her feelings can't change, like she is frozen. Also,
she isn't working for Naraku. According to Miroku, once someone uses the jewel, their
soul is bound to the jewel. In volume 13, Kikyo said "My dear Naraku… Go forth and
gather the shikon shards. And when you have finally obtained the entire shikon jewel… I
will send you to hell.". Together, the information means she will purify the entire jewel,
with Naraku's soul attached, at once, thus getting rid of both Naraku and the jewel at the
same time.