I almost think you need some kind of professional intervention or support.
She clearly had MH issues or some sort of disorder, and there is evidence in your record that you had PND, caused it seriously exacerbated by her.
And your Dd has anxiety. Does MIL do anything that is the cause or exacerbation of that?
I would go to your GP and ask if there is any firm of mediation or family therapy that you can be referred to, so that MIL can get told independently that her behaviour is destructive and needs to be diverted.
But it is probably a fantasy that such a service exists.
It Is all so disordered. The waste of money in leaving a property uninhabitable etc.
Has her own MH support stoped now?
How would it be if your DH said he was using the next 3 days off to clear the small property and she needed to help him?
“No it isn’t possible to have you live with us as we haven’t got a spare room. And it isn’t necessary, we’ll get the flat cleared....No, that has to be our decision. No, it doesn’t work for us...No, this is not something we will re-consider so that needs to be the end of the conversation “
And then “All day doesn’t work for us as a visit. We’d like to see you from 5pm til 8 for dinner but these days we have too much to do and we need time to ourselves. Se you st 5pm”.