The last time I confronted my SIL I had to get on a very low dose of antidepressants for a couple of months just to get through it. Short term, it would have been easier to just swallow my pride, not say anything, and go on as usual. Following up to meeting with her I started to have panic attacks and had trouble sleeping. Meeting with her really was scary... .she went into a rage.
I have to say, as intimidating as she can be in the moment. When I look back on situations where we walked on eggshells around her, the situations are just ridiculous. It's like being afraid of and allowing yourself to be controlled and manipulated by a child.
She is a covert narcissist and I am her favorite target. I never know what to expect and the not-knowing sometimes leads to extreme anxiety. I get the feeling she's very aware of her effect.
If you suspect that your DIL knows the effect she has on you, you're probably right. I think in general terms, my NPD SIL wants to do good in the world. But when she bullies and rages she seems to feel justified about it. She once talked about remembering the first time she raged when she younger and that it gave her a good feeling. That's always stuck with me. I used to imagine that when she raged, that she must feel as awful as she was making everyone else feel. But now I wonder if she's actually getting a sense of pleasure from from causing others to fear and react to her. It gives her narcissistic supply.
From what you write, I can see that you really love your grandchild and it's important to you to develop a relationship and be a presence in your grandchild's life. But having to deal with your DIL comes at a high emotional cost. I don't blame you for quitting therapy, since your therapist didn't seem to have a lot of information about personality disorders. I've never gone to a therapist myself. But there is a lot of great information out there --books, websites, podcasts. For me, even when I learned information and got advice from people on this forum, it still took me a long time to really understand the dynamics or to figure out my boundaries. So give yourself some time. Take care of yourself. If you're feeling very anxious right now, it's okay to physically back off from your son's family for awhile. It's not going to damage your relationship with your grandchild if you're not there all the time.