Who is the old woman in the castle? Why is she so much more important to the poem than she appeared to be? What did she want to do the Arthur's knights and Arthur's queen?

Morgan le Fay was the ancient noble lady at Hautdesert castle. She was important because she was actually Arthur's half-sister, and she desired to destroy his kingdom. Morgan was also responsible for enchanting the Green Knight and setting him upon his course to issue the initial challenge at Arthur's court. Her intent was to test the knights' honor.