Nimrod wrote:OK, so why does she remember anything? ... She would not - as memory is a physical configuration in the brain.
Well, if you're going to ask that all of Wapsi Square be explained purely in terms of "reasonable physics as we know it", you're going to be rather frustrated
As an intellectual exercise, though, it's fun to tackle the questions you're raised, and try to resolve them within the framework of Wapsi as Paul has shown it to us.
So... memory, and memory loss. There's one good example of memory working as you say it should - Epimetheus/Justin. We've been told that he lost his memory, as the result of a severe skull injury (Excedrin Headache #357 or the like). His brain grew back, but he lost his memories in the process.
We've seen Justin's immortality / healing power at work a couple of times. It appears to be an incremental re-growth process... damaged or destroyed tissues grow back from the parts of his body not destroyed. The man is a (para)human starfish

and it seems possible that all of his regrown tissues are in a largely "blank slate" state. So, memory loss isn't unreasonable.
However, Monica's Phoenix immortality seems to work very differently (from what little we've seen of it in action). It looks like a high-energy phenomenon (astral fire, smoke, bright blinky lights, and so forth, and her cussing outdoes Justin's by a mile). It's not just a "re-grow the tissues from either side of the wound", as far as we've seen. The reputation of the Phoenix (one version at least) is that it actually burns itself to ash and is then reborn from the ashes. It may, in Monica's case, be acting as a sort of high-falutin' matter reorganizer - burn the body down to its component elements, and then rebuilt it from a pattern. Clearly, at least part of this pattern is set by her physical state at the time she was stabbed... but this may not be all of what's happening. Presumably, there have been Phoenixes who were never stabbed with a Bia-blade... and yet they managed to regenerate... so, there's room for some flexible thinking here.
It may be that the "Monica pattern" which is used to rebuild her physical form isn't just a static snapshot of her state at stabbing-time, but is somehow dynamically updated... a sort of "tricorder scan" of her memories and brain-state at the time of her "death" could be used as one part of the pattern. And, in this first big regeneration at least, Monica's head and brain were not compromised... so her updated memory pattern would have been completely intact.
What's more - in the Wapsiverse, memory and thought may not be
entirely a matter of the physical arrangement of the brain. We've seen that Monica was able to think, remember, and communicate as an incorporeal spirit or ghost or projection, while her body was apparently comatose. We've been led to believe that Wapsi humans do have incorporeal souls which define their identity to some extent - Tina Guzman's soul ended up spackled together with Shelly's demons, creating the hybrid Conscience... whose memories were then erased due to the mis-behavior of the demon coven.
And, for one more example... when Shelly's sphinx-persona returned from the Time Forest, and fused with her human self, her sphinx memories and aura came along... even though it wasn't until quite a bit later that Shelly first morphed into sphinx-form in the main Wapsi timeline.
So, it seems to me that Pablo has created plenty of precedent for what's happening with Monica.