Maureen Forsyth and her family said they "lost everything" as she endured two months of treatment, blood transfusions and staring death in the face.
But it later emerged – thanks to the chance of a medical trial – that she in fact only had a collapsed lung and the cancer had never been present.
While she and her relatives were delighted at the news, they say it ruined the subsequent five years of their lives, resulting in bankruptcy and psychological ill health.
Today Mrs Forsyth, now 63, talks for the first time about her ordeal after her legal challenge to take NHS Lothian to court, which prevented her from speaking publicly, was dropped.
The health board has admitted the diagnosis of lung cancer, which they suspected had spread extensively across her body, was incorrect.
However, it is understood it would have successfully argued that there was suspicion beyond reasonable doubt to think she did have terminal cancer, meaning any negligence case would probably fail.
Mrs Forsyth, a former sheltered housing warden who lives in Magdalene, said: "They told me I had weeks to live, that I was to go out and enjoy what time I had left with my family.
"They said I could have chemotherapy that would slow it down a bit, but otherwise there was nothing I could do. I have had health problems before, with arthritis, and in my lungs, and had smoked for about 30 years. But otherwise I felt absolutely fine, I didn't feel like cancer had spread to my chest, stomach, liver and neck like they said it had."
The cancer diagnosis in November 2004 at the Edinburgh Royal Infirmary sparked a chain of events the Forsyths say they have never recovered from.
"Of course I was relieved, but then the anger set in about it all," she added.
"I had begun to arrange my funeral with both the undertaker and St John's RC church in Portobello, and my husband left his job of 20 years as a forklift truck driver so we could spend the last few weeks together.
"He was able to do this because I would be getting about 30,000 life insurance, so it wouldn't matter too much. We spent our savings on a trip to Lourdes for the family." When the error was revealed husband David, now 64, tried to get his job back, and an NHS Lothian consultant even wrote to his employer explaining the situation. But a round of redundancies had just been made, meaning he couldn't be re-hired and missed out on a severance package.
"We've gone from living comfortably to having nothing, I can't get credit now and I had to file for bankruptcy."
Given the bleak prognosis, Mrs Forsyth – who has three children – took up the offer of a medical trial involving chemotherapy at the Western General in the new year out of both hope and desperation.
Although her hair fell out and she received a blood transfusion, she felt considerably better than anyone else taking part. There was no sickness or other side effects common in a cancer patient receiving chemotherapy.
Then, on 21 January she was summoned by a consultant oncologist to receive some "good news".
"I assumed I'd be told there was no cancer in my liver, meaning I might have a bit longer than previously thought," she said.
"Then she hit me with it. I had no cancer at all, and never did have. It was as if this was everyday news, but all I'd heard previously from doctors was to enjoy what little time I had left. I was stunned."
The misdiagnosis affected the whole family, they had spent 2,000 visiting Lourdes, and in a way, the miracle cure did arrive, even if it wasn't in the way she expected.
Mrs Forsyth added: "If it hadn't been for my faith, I would have taken my own life, that's how low I was."
A meeting was held in March 2005 between the family and several health bosses.
Minutes of the meeting show that "the team were all confident at the time they had made the right diagnosis".
Another leading doctor at the meeting admitted he had "lost some confidence" in one of the systems used for diagnosing cancer and that Mrs Forsyth's case had "presented unique circumstances".
The family were given legal aid to pursue a court case but have now dropped it.
Mrs Forsyth said: "It was never about money at all, I wanted my day in court. All this time I've not been able to speak out because I thought we'd be going to court. But we can't take it on any more, we don't have the money to pay ourselves to take it through court. All I wanted was some admission that they had done wrong and to know why."
Dr Simon Mackenzie, associate medical director for NHS Lothian, said: "As we have not been informed that Mrs Forsyth has withdrawn her legal action, it would be inappropriate for us to comment."
SENT HOME HOURS BEFORE BABY DIED
AS THE Forsyth family were recovering from Maureen's misdiagnosis, a new tragedy struck.
In 2007 daughter Michelle, now 42, lost her unborn baby after suffering pre-eclampsia.
Although she did not lodge a formal complaint, she complained that she was sent home two hours before her baby Anthony died.
"I was at the ERI one day and they told me my baby was full of life. A few days later he was sluggish and I was told I had pre-eclampsia.
However, the consultant sent me home and even told me I could return to work."