Not sure it's all the backing harmony's fault - she has an ... idosyncratic ... sense of pitch. It gives her a different sound, but it's tough to harmonize to a pitch center that shifts over the course of a phrase. So don't throw the baby out with the bathwater but the vocal lines need to be consistently closer to each other for the harmony thing to work, so she could make it easier to follow by staying in concert pitch more of the time, and you could match her better by focusing in on when the pitch center is shifting in the main line.
You guys have way too many single notes going on in the guitars. Again, the lead finger picked acoustic isn't necessarily making things easy for the accompanist, but that is an important part of the sound so you have to figure out a way to work with it. Pick your spots for the single note runs, add dynamic and textural interest by playing more partial chords and spend a non-trivial amount of the song NOT PLAYING ANYTHING AT ALL.
