YANBU IMO
I have a friend with a DS like this too, they are due to visit over the weekend and my DS1 has told me he's dreading it. (He is a couple of years older, has moved achools and seems to have "outgrown" the other boy.) He doesn't like DS playing with other kids, can't share, is incredibly inappropriate with the things he says in front of adults and younger children, throws up if he can't have his own way etc..., his mum hardly tells him off, thinks he's funny.
Last time we were together he said something that made me, so I did mention it (I have 2 younger DCs that I wouldn't want speaking like that) DS1 really doesn't want to play with him, but I had terse messages a while ago about from mu about was DS avoiding him etc, she's conveniently forgotten that her eldest (who was originally my DS's friend) used to stay in his room when we visited once he felt he was "too old".
I think she is maybe not blind to it, but doesn't bother so much with discipline because he has a medical problem, but TBH, he behaved this way before he got his DX (it is not behaviour-related BTW) and has always been incredibly spoilt. Last time they were here she got pissed and ranted on about how I should be grateful my DCs were healthy (and obviously I am - who wouldn't be - but it was a bit uncalled for), it seems a bit that she is proud of the way he acts
I know my kids aren;t angels, but I would like to think (or at least hope) that they can muster a little respect for adults!