A 26-year-old woman has been charged with the October slaying of a Southeast Washington man who was found on the floor of her apartment with 25 stab wounds and with a butcher knife stuck in his chest, according to D.C. police and court documents.

A man previously charged in the slaying died of cancer four months ago in the D.C. Jail, according to court documents. Police sources said yesterday that they believe that the man may have agreed to take sole responsibility for the slaying because he was terminally ill.

Police allege that at least three persons conspired to kill Gary Ballard, 40, who was found stabbed to death Oct. 20.

Debra Lavinia Finley, who was arrested June 28 and charged with first-degree murder in Ballard's death, was released from jail yesterday on a $20,000 bond.

Prosecutors in the U.S. attorney's office in the District had asked that Finley be held without bond and said they were outraged by her release because of the severity of the charge.

Finley, of 1413 Half St. SW, was described by sources as a longtime friend of Charles Canty, 39, who was arrested shortly after Ballard's death and charged with his slaying. At the time of his arrest, Canty was described in court documents as being terminally ill with cancer and as having only one leg and several tumors. He died in the D.C. Jail in March.

The body of another man, identified by police as Neil Jones, 26, of 1903 17th St. SE, was found at the Half Street apartment on Jan. 4, police said yesterday.

They said that Jones, described by one police source as a drug courier, may have been involved in Ballard's slaying. Jones died of an injection of especially potent heroin, and his death is being investigated as "suspicious."

Sources close to the investigation said yesterday that Ballard's death apparently was the result of a $100,000 drug deal that fell apart.

According to court documents, witnesses told police that the day before the stabbing Finley was seen "chasing Ballard to his parked car with a large butcher knife." Some witnesses said they heard Finley say, "I'm going to kill you," according to court documents.

Another witness recalled a conversation with Finley in which Finley displayed a large butcher knife and said Ballard did "not deserve to live" and that she was going to kill him, the documents say.

The same witness, according to the documents, "overheard Charles Canty discussing with the defendant in her apartment about the possibility of bringing Ballard back to her apartment for the purpose of killing him."

A police source said that Jones was in Finley's apartment at the time that Ballard's death was allegedly discussed.

Witnesses said they saw Ballard enter Finley's apartment the fol- lowing afternoon, according to the court documents. About 6:15 p.m., according to the documents, Ballard made a phone call in which he said, "They're trying to kill me."

The call's recipient described Ballard as sounding "terrified and frantic on the phone," according to the documents, which also state, "The phone was slammed down, however, before Ballard could say anything further."

Four hours later, police found Ballard's body lying next to the phone on the living room floor. The medical examiner placed the time of Ballard's death at between 2 p.m. and 6 p.m.

According to court documents, Canty first told police that he and Finley jumped on Ballard and stabbed him following an argument. However, later that evening Canty changed his version of the stabbing to omit Finley's participation, the documents say.

Canty said he hit Ballard with his crutch because Ballard was attacking a "female friend" with a knife. Canty said he then grabbed the knife from Ballard and proceeded to stab him several times, the docu- ments say.

Finley, who is unemployed, has admitted that she was present in the apartment when Ballard died but she has denied participating in his slaying, according to the documents.

Finley did not want to comment on the charges yesterday, according to a woman who answered the telephone at her apartment.