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Since they are still married, he has the right to continue to reside at the marital residence unless an arrest is made or there is a restraining order. Your mother in law can file for divorce, and as part of the divorce proceedings ask for an order of exclusive possession of the marital home. That will get him out while the divorce is pending. You should certainly contact the police in the meantime if there is any criminal behavior or threats of violence.
Unless he does something criminal, the police cannot force him out of the home. It is a civil matter. To get civil relief, your mother in law can file for divorce. It's not that he has rights, but you mother in law needs to take some action to get him out.
Yes, the granddaughter can still file a police report at this time.