I had a friend who lived in the nicest part of an area and, when the house next door to her came up for sale, her DS and DIL bought it. They had strict ground rules and she and the DH never went round randomly or without being invited. It is still working famously and the children and grandchildren have had the benefit of wise and generous neighbours.
However, it could have been otherwise and only worked because my friend and her DH were so tactful.
In the OP’s case, the MIL seems to be needy, controlling and encroaching. She has already overstepped boundaries and the DH is not helping by choosing his DM over his DW.
Personally, I think that sorting out the DH’s mistaken priorities is the first task. He needs to know he must put his wife and family first and that the MIL moving next door will jeopardise the family’s happiness and cause continual friction as her behaviour and demands become ever more unreasonable.
Having said that, if the woman can afford to move next door no one can stop her so it might be wise to set up some rules before she does. Are there other siblings? It might be worth stipulating that, if she wants help with the doer upper, she must leave the property to her son and the OP in her will. It would certainly be worth saying that, for her sake (cough cough) you will only be seeing each other at certain times, for example, between three and five and not at weekends or in the evenings. There will be no ‘popping in’ and so on.
Good luck with the whole business.