The BIL in saying that she's 'not proper family', that puts the OP's husband in an impossible position.
This is where this phrase is relevant:
Either the step daughter is part of the family or she isn't.
The OP's husband sees the daughter as family, because she absoluetely is to him. He's married and he lives with her full time as the only father figure in her life.
The BIL gave him a choice - accept the step daughters position as being less than all the other guests at the wedding, including non-relations in terms of relations with the family or not attend. This isn't even about being treated as an equal to the SIL's children. Its about being recognised as a part of the extended family.
Given that cousins were attending and no doubt other relations who are only related by marriage (including the cousin's partner???), this says a lot.
The comments about the OP and her making a fuss about this to make up for the lack of the step-daughter's family spell it out:
The OP says this about her FIL: "He does feel however, that I want them to make up for the deficits of my child’s biological family. I most definitely do not but want them to be respectful of our family unit."
They have no respect for the OP, disapprove of her life choices and don't think either she or her daughter are good enough. They don't want to accept the step daughter into the family because of this. Because 'prejudice'.
Family comments at the wedding about the step daughter having to 'take away a place from someone else' merely echo that attitude. Thats not how weddings work. Ultimately they could have just paid for one extra guest - the step daughter wasn't deemed good enough for the family. She's damaged, faulty, tainted, below their social heirachy standards.
Thats a CHILD being rejected through no fault of her own, because she's been misfortunate. Thats stigma - thats a dark age attitude to divorce / single mothers. And thats where the OP's Husband is stuck, because he can see that rejection for what it is. His family regard him as marrying below them and are punishing him for lowering himself to a lower social class.
The OP's own wedding is a problem for that reason - not because it was small and BIL wasn't invited. Its about social class and snobbery. The family doesn't approve of the relationship because the OP is a divorcee with a child, and worst still a child with a deadbeat Dad. They don't want the step daughter because they regard associating with her as giving the opportunity for her to 'leech onto the family' in someway. They don't want the OP's husband to take on the responsibility and see her as his own. They disapprove of the family unit he is happy with and sees as his own.
This needs spelling out. The OP needs to be crystal clear about whats going on and so does her DH - especially if they live in a small community and see people who were regular guests at the wedding. These people aren't worth it. They are insufferable snobs she's best shot of.
However I would say, that you can bet that there will be guests at the wedding who were stunned at the BIL mentioning his brothers reason for not coming and won't be impressed by the BIL. It was a massively dickish thing to do, and others will see through it.
OP, I hope you and your DH are ok. Don't let them drive a wedge between you. Cos thats the aim... They don't think you are good enough for your husband and their family. They will be all to happy to see your relationship fail just so they can go "Well its not a surprise is it. I mean look what happened last time".