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They can't put it on your report - it is well past the 7 1/2 year time frame.
However, they can try to collect from you - and apparently they are......However, you are so far outside the SOL and a reporting time frame - that they should offer you to settle for something low. Which is why they tack on so many fees. Now they can try to settle the $900 they say you owe for $300 and basically the original debt is paid.
Offer them something like $100 (10% or so) and get in writing that this is considered paid in full. (If it is really your debt - if not - that is another story)