What you are reporting is frightening, especially since your DD is intelligent and high functioning. What you report about her child almost sounds like Munchausen's Syndrom by Proxy. Very scary stuff...I wish I had more to help you.
I can answer your question
How did you get her Dad to open his eyes?
My SD has addiction and I was finally able to get him to see that she was lying about some missing medication. I got him to open his eyes by just very slowly going through the logic of the situation. Putting two and two together, different events that we knew about for sure with events she was lying about or misrepresenting. I would try to find really relaxed times to bring these things up because he had a tendency to get defensive about her behavior.
Understanding that she had stolen medication (hydrocodone for my DD's minor surgery) made it easier for him to accept that she was hiding some level of addiction but we really didn't know the true extent of it until we took away her car for a drunk driving incident and she went through withdrawals with subsequent grand-mal seizure right in front of her Dad. This was a very key moment to his accepting that she had bigger problems than he ever believed possible. So, as you can see, there was an element of chance involved as well.
But, I will say that I had done enough chipping away at his denial that once he saw her seizure he was ready to STOP the enabling because he had been sort of building a mental dossier in his head of this and that until it created a really whole picture of her mental illness.
Is there any way that you can maybe get some facts together in writing for him, facts that might be irrefutable in a logical way that he can't stand in denial of? Such as I did about the theft?
For instance, When SD took my daughter's drugs the only people that had been in the house were the four of us. He knew I didn't take it, he knew my DD wanted it for her pain and wouldn't have kept herself from it and he knew I wouldn't have taken my daughters pain meds, I also wanted her to have it. SD was left alone and knew we would be gone for awhile. During this time frame she didn't hit him up for money ( the inference was she either took the drugs or sold them for money, thus she didn't need to spend her money on drugs until the drugs she stole ran out OR she had money from the sales for a period of time.
Then after he had absorbed all of that I put together a list of facts about her money. I had collected pay stubs from her job, she left them laying arousnd and instead of putting them away in her room, I saved them in an envelope. he was always claiming to be broke, her reports of her pay HAD to be wrong based on the number of hours she was at work and how many days a week she was working. He had a tracker on her phone and I would document on paper when she was at work whenever he tracked her in front of me. I added up all of the paystubs and what he predicted was how much she took home, was off by several hundred dollars. Then I went over what her normal living expenses would be on a weekly basis, and also put down on paper whenever she borrowed money, how much and the dates. So, then he had to really SEE that she made plenty of money to live and that he was supplementing her income by a fairly large amount. What was she spending her money on?
It was a lot of work for me but it was really the only way to give him the big picture because he would believe her lies.
We have also gone to Alanon and his learning of enabling behavior got him to see that he was enabling and actually keeping her from "Needing" to be sober, or chosing to be sober.
This is, I think, quite a different situation than the one you are involved in but it is obviously imperative for you (and then obviously for your families ultimate safety) to be able to get your husband to open his eyes. I would start by reading the workshops here and any other books anyone else might want to recommend.