I think you're probably right about how it started, but not for long. Holmes was a student when she came up with her first idea for a medication delivery system. It wasn't viable then, but researchers are making some progress on something a bit like it. Of course, she didn't want to do what those researchers are doing and actually try some stuff to see if it worked. She wanted her idea to be hailed as revolutionary, which is the same thing she wanted and got with her next idea for a testing machine. I'm sure she thought it was doable at the beginning, which helps to answer some of your other questions. She wasn't interested in learning the things needed to actually invent it, and that was probably comforting to her because if she did, she'd realize how difficult the task really was. I'm sure that for the first few years, she was thinking that all she had to do was continue bringing her genius-level management skills and eventually one of those techies she hired would get the box working and she could show it off.
"at what point did they go from thinking that maybe they could succeed to knowing they couldn't? And were they still chasing investment at that point?"
It's clear from the history that they were seeking investment until the very end. They also knew pretty quickly that they had entered the realm of fraud, even if they were still paying some people in the hopes that someone would miraculously build what they said had been built. While the way she sought investment was fraudulent from the beginning, she knew what was going on when it changed from saying that technology existed that was being developed to saying that technology was being sold when it didn't yet exist.
"The puzzling thing for me is that while there have been many cons that followed a similar pattern most such cons involved cutting and running, or at least planning to cut and run."
Your experience is different from mine. I've seen plenty of criminals arrested and every time I read an article, my brain automatically runs me through a "if I were a criminal" routine. This routine doesn't get very far because the first thing I consider is why the criminal kept committing crime when they would probably have been just fine if they stopped after a couple engagements. This is especially true of criminals who pull in millions in stolen funds, more money than I will ever see in my life, and somehow still decide to keep taking risks. Maybe my lack of desire to own a private jet means I'll never be a good criminal psychologist, but at least it means I'm unlikely to turn to crime. I've seen a few examples of criminals who got their windfall and ran away, but I've seen many more examples when they had enough money to buy whatever they wanted and still went back again and again until they made a fatal mistake. Holmes was one of them, and she made her mistake.