wow.. sorry this is so late.. but I think you have every right to set boundaries with your Mother-in-Law. You and your husband and your children are the immediate family, they come first. She can share time w/ you guys but her time is at the 'offering' or giving of you. Yes she should be able to see her grand child/ children.. however.. its not up to her how much, its not up to her how you raise your children, and she doesnt get to be part of your lives ALL THE TIME. And if YOU say 'NO' to something to your child, she should back you up and support you on this, not try to make herself look like 'the good one' to the child and make you look bad or try to insinuate that you have done something wrong in some strange and (manipulative?) way. That is definitley not right, imo.
Yeah you did nothing wrong here. Go ahead and set some boundaries with her. She wont like it but when you explain to her that she will be included in 'such and such' and you definitley want to see her on every other sunday (for example), then she will feel better knowing she has a place but knowing more of WHAT her place is.
She has to learn that manipulation is NOT the way to get what she wants.. especially with you anyway.
Anway.. good luck and I'm sure things are getting better!!
(hug)