Yes she has been diagnosed with BPD but refuses to admit something is wrong
Wow so she actually has been diagnosed. When did that happen? And has she ever been in therapy for her BPD?
Another article that might be helpful for you as you try to establish and maintain firm boundaries, is the article we have here about fear, obligation and guilt. Here's an excerpt:
... .fear, obligation or guilt ("FOG" are the transactional dynamics at play between the controller and the person being controlled. Understanding these dynamics are useful to anyone trying to extricate themselves from the controlling behavior by another person and deal with their own compulsions to do things that are uncomfortable, undesirable, burdensome, or self-sacrificing for others.
Would you say that your mother-in-law uses fear, obligation and/or guilt to try to control or manipulate you and your wife?
You can read the entire article about FOG here:
Fear, Obligation and Guilt (FOG)