OP I would seriously take this as an opportunity to go NC for good! Your SIL has behaved beyond vile! There is something incredibly wrong with her as a person, for her to make those demands of you!
Knowing that they refuse to accept your babies, who your dh has adopted honestly I have no idea how you have continued contact for as long as you have!
I have been there, my outlaws pushed their nastiness too far and I had no choice but to go nc. Firstly, I made it clear that myself and our dc would have nothing more to do with them. I left it completely up to my dh how he would carry on. Within a couple of months he made the decision to go nc too. It was his decision completely, made for the protection of his own mental health, there was no pressure from me at all! Seven years later, we have never been happier! Fifteen years we have been together and our only regret is not cutting them out sooner!
(Ok we regret that they were assholes, narcissists and sociopaths- we do wish they were better people and we could have a loving or even just average/ normal relationship with them).
DH has had three different sessions of therapy to help him cope. DH still loves them, he is a loving, kind and gentle man, so despite their awful abuse I know that he will feel guilt if/ when (one of/ both of) his parents die. I feel guilt for the hurt he has felt and the guilt he will feel but I know that they made it impossible for contact to continue.
After reccomendations on here, we have both read Toxic Parents and Toxic In-laws by Susan Forward- I would thoroughly recommend both books for yourself and your DH. Susan Forward has also written a book called Mothers who can’t love - a healing guide for daughters:
www.amazon.co.uk/Mothers-Who-Cant-Love-Daughters/dp/006220436X/ref=sr_1_1?keywords=susan+forward+mothers&tag=mumsnetforum-21&ie=UTF8&qid=1548114641&sr=8-1
There is also a fab website called daughter of narcissistic Mothers the website creator has also written several books which might help you in coming to terms with your guilt.
www.daughtersofnarcissisticmothers.com/
You don’t deserve to be treated the way your in-laws are treating you! Life is far too short to spend it with cruel narcissists!