Hello, I'd like to try and answer your question. Welcome!
This is a difficult situation for your daughter and her husband- as well as for you watching it all unfold.
This woman you describe, yes she may be ill, but she is being abusive to the entire family, including the children for what they are witnessing. You said she's ill, but not taking care of herself. She should be asked to leave. By her continuing in the home it only enables her to continue to be abusive. The"rules" have not mattered, and pretty unlikely the rules will begin to matter to her. She sounds physically and possibly mentally ill. Your son in law can not force his mother to take better care of her health, but in asking her to leave, he will be left to deal with extreme guilt. His mother has likely quilted him much of his life, and he may continue to feel like a child. However, in asking her to leave she may be more inclined to "hit bottom" physically and will be forced to take a look at her health.
Thank you so much for your reply. This is a great help.
We know it's hard to accommodate a parent in a home that a couple has established. She has come in like a bull and disregarded/disrespected the entire family. She may also need more care than your daughter and son in law can provide. It would be one thing if she was trustworthy and contributed positively to the home- but I'm not hearing that is the case.