MIL issues getting worse!

Ok, so my mother in law is becoming more and more of a monster in law. She has always had her issues but lately it has been getting so much worse. Let me start of by saying she has had rx medication problem for years - before I even married my husband. She has done all sorts of things like passing out, drooling in the living room while the whole family and all kids (including my husbands) are trying to have a holiday dinner, overdosing at work and at home on anything she can get her hands on, and more. I feel as though her addiction is tragic but at the same time she refuses to get help. Rehab didn't help and she refuses to admit she has a problem. She has put my stepkids in harms way with her dog biting the youngest 3 times. She doesn't listen to my husbands rules and scoffs if anyone tries to enforce them. She says she's grandma and she raised kids herself. Well, after I got pregnant I began to see her true colors more and more. Every goal I have as a mom is shot down by her or she adds her two cents. I was getting out of a vehicle (7 months preggo at the time) and she said "watch out, wide load!". Well, when she invited herself to our house for 2 weeks after my first child is born, I got angrier. She comes to my house and cleans, which may be nice for some but for me, it's a pride thing and I asked her not to. She said she will do whatever she pleases. I finally sat down with her and my FIL per my husbands request and I tried to lay my concerns out on the table. I explained that this part of my life is very emotional and I didn't appreciate the constant remarks on my parenting choices, or the comments that u til now I've just babysat my stepkids. She made a comment that my only job is to care for my daughter. I got upset and she got IN MY FACE and started yelling "damn you for thinking that's what I meant". I can't hardly remember what else she said because I kept telling her to get out of my face. This is my home and she had no right to do that. She wouldn't listen to anything after that. I tried to tell her that I fear she won't respect my wishes as mom when we visit her and that she has demonstrated bad judgement too much in the past. She just crossed her arms and shook her head and kept yelling, and it made me yell. Finally, she left and his father, who was in shock, told me he understands and that I was right to yell at her for getting in my face in my own home. He also said he is so sorry if he made any comments that made me feel as though he was speaking down to me. Of course my MIL lied and told everyone I was the mean one and that I told my husband to leave her on the side of the road, and more. Now even her own kids know she lies but she is spreading this crap and it hurts. Furthermore, my husband just finished up a bad custody battle. We owed our lawyer an obscene amount of money and finally he caved and asked for a 4000 loan until tax time so that the other 11000 we had just spent wouldn't be for nothing. She secretly loaned him the money and then blabbed to everyone that she did, saying he is ungrateful and even implying that brian took advantage of her. Needless to say I will be paying her back personally within the month so that she has nothing to dangle over us. I want to cut her off completely regarding contact with me.

What should I do regarding my daughter and contact with her? I'm at a loss....

I know this is long but if you have any questions please ask!