Gave me chills reading this, because I am in the exact same situation. My sister is incredibly volatile, and has been for decades. I had a thread on here about it a while ago. She also has a son and daughter, who see a lot of what goes on. Her DH (thankfully) is very calm and doesn't argue, so he calms her down somewhat, but he is also her enabler, because he won't challenge her behaviour, and sides with her, no matter who is in the wrong.
Growing up, our parents were the same, and my sister has taken up the baton, so to speak. She has ruined more family events than I can remember. She also hospitalised me once, as she was screaming so much in my face, that I had a full blown panic attack. She has also had tribunals at work for her aggression towards colleagues, which included threatening to punch someone in the face, and also accusing someone of sexual harassment when it wasn't true (her DH doesn't know about this).
She has made up several lies about me over the years, and I have no idea why. Also, whenever I did anything nice for her, she would try to find "the angle". How was this thing wrong, for eg, I sent her flowers for her birthday, but that "wasn't thoughtful enough". I've got hundreds of examples.
A couple of years ago, she was sending me several abusive texts a day, and I snapped and went NC. After 30 years, I just could not take anymore.
I now cannot see my niece and nephew. When I went NC, she sent me one message asking if I could keep in touch with them. I sent her DH a text asking for him to facilitate this, via facetime. He said No. When I was in their town a few months later, I asked (via my Dad), if I could take my niece and nephew out for the day, the answer was No. So, what can you do? I know for a fact, that in her eyes, all blame for lack of contact with niece and nephew will be my fault in her because that's how she twists things.
I live a very peaceful life, hardly ever argue with DH, and never argue with my DC. There is no way, I'm continuing the cycle that I grew up in.
You might not be ready to detach yet, but I suspect that you will eventually have to, for your own sanity.