Let me first say, I understand where you were going with her. She was supposed to be a parody of Mary Sue type characters, but she kind of became a contradiction.
At one point she said that Harry was the focus of the fanfiction, and kept mentioning that, yet it seemed like she was constantly trying to take over, or make herself the focus. It especially came out during that conversation with Dumbledore. There are several other ways that Lucius situation could have been resolved, without her having to become his guardian. That again made her come off as trying to become the focus or centerpiece of things (an example would have been Harry requesting that Lucius Malfoy give a wizards oath on his life and magic, as well as that of his wife and son, that he never willingly served Voldemort. After all, it wouldn't do to place the BWL under the guardianship of a Death Eater, even if he did buy a pardon.).
I think it might have come off more amusing if you'd had someone or just people in general recognize her for what she was, and having it constantly brought up to knock her down a peg when she got all high and mighty.
Honestly, it started getting weird when Mary showed up. If this had just been a normal Harry, then she may have been doable if toned down. This, however, was a Harry who was not only aware of what was going on, but fully aware enough to break the fourth wall. He really didn't need Mary Sue coming into the picture.
Author's response
First off, thank you for replying. Your opinions are well reasoned, and I even agree with one of them! :)
My aim for this story was a +5 Funny. It may not have hit a home run, but it was at least headed in the right direction. Plot was secondary, and I freely admitted in the story that I didn't have one. Most of the ideas in the story were like the setup for a joke - you set the scene, let the dialogue verbiage tickle the funny bone a little, and then WHAM! you stick in the punchline. The whole bit with Malfoy-as-potential-guardian was a setup, "No, he's not a suitable guardian." would not have been much of a punchline. Dumbledore naming an eleven-year-old as Harry's guardian was unexpected, and therefore funnier (hopefully).
One canon thing that I have always found limiting is Dumbledore's Legilimency. Sure - I can just say, "Harry and Mary Sue learned Occlumency in their past lives," but I personally consider that a cop-out. So I have to deal with a Dumbledore who is both a very powerful wizard and a mind reader. That's a tough tightrope to walk and I feel that I've never really been able to navigate that issue successfully. (I'm referring here to several stories I've written that will thankfully never see the light of day.) My take on the Mary Sue vs. Dumbledore thing is, she's not much of a Mary Sue parody if she can't stand up to the Headmaster - and win. She can't do that forever, of course, because canon Dumbledore is a bit of a Gary Stu, himself. The best she can manage is to catch him off guard, get in her licks, and then run like hell!
I really like the idea of others "knocking Mary Sue down a peg" and that might be a great comedic device for another fic. I tried to go there with Harry telling her, "You're not all that exceptional, actually." Mary Sue couldn't let that stand, however, and she HAD to counter-attack. That's the way I write - I visualize the characters and then let them do their thing. Mary Sue's 'thing' was to not take no shit from no body[sic].
As to your last point, the Mary Sue persona was the impetus for writing this fic. She was the star of the show, not Harry. Without her, I would have had nothing to write about. Unfortunately, she met her match with Dumbledore and surviving at Hogwarts with him as the Headmaster was not going to work out - at least not in a +5 Funny sort of way - so I really did use the bit from my previous reply to give her a graceful exit in Chapter-10. (And apologies for the misspelling to any Naruto fans reading this. I'm a bit dyslexic and that's how I've always pronounced it.)
With Mary Sue gone, however, I'm having a hard time going forward. Right now Hermione is suffering from a severe case of hero-worship (in a "You go, girl!" sort of way) and is wanting to emulate Mary Sue - in a more reserved (but over-achiever) Hermione Granger-ish way, of course. We'll see what happens…
Again, I really appreciate your reply. It's sincere feedback like this that helps us all to improve.