How to Handle a Difficult Mother-in-Law?

I need to vent for a minute and this may be long so feel free to scroll on lol

My freaking MIL drives me crazy. My fiances dad got out of prison recently. They are divorced. He was an addict and made her life hard and she was a cheater who made his hard. She hates him. And he doesnt like her much either but he doesnt really speak badly about her and has always pushed my fiance to have a relationship with her. She on the other hand will talk about him badly anytime his name comes up. She took it upon herself to text him and tell him he cant see my kids because "she's not losing her time with them just because hes out of jail" shes also been bugging us almost daily about keeping them overnight. The answer has been no every time. For one thing she lives 45 minutes away at one house and the other is over an hour. She tends to pay more attention to her phone or whatever it is she is doing than the kids. Amd tried to make them do things they dont want Hondo so she can get photos of them and ends up ticking them off. My son is wild. Hes always into things and tends to hurt himself climbing and being the wild little boy that he is. If he were to get hurt and need to go to the ER we would be almost an hour away. She decided to text my grandmother (she watches my son while i work) and ask HER if she could keep him overnight. She thinks that she deserves all of the kids time on the weekends. We work during the week and dont have visitors much so we save weekends for family time. She thinks she should be the only one to see them on the weekends. She forgets that the kids have other family who want to see them too. And now shes driving me nuts texting me telling me shes their grandma and should be allowed to keep them overnight and spoil them like a regular grandparent. I have seen her boyfriend try to give my son who was one year old at the time a gobbstopper and hard candies that he can't have. He for some reason likes to try and take him on walks alone and has snuck off with him. We don't know him very well and it makes me uncomfortable. We let her keep him overnight once and he came back with weird rashes/scabs in between his legs. When asked she said she didnt notice them and that it might have been from the couch because its a ruff material. Either way it was strange to me. Both my fiance and i dont fully trust her alone with him because she is so easily distracted. My fiance and her got into a big argument yesterday after he found out she was texting his dad that he cant see the kids and asking my grandma to let her keep them. She text me afterwords saying shes just going to stay away. My response was that that was her decision and she can come over and see them whenever she likes but shes going to have to put up with the fact that there may be other people here too. We are having the holidays here and everyone is invited and i expect everyone to remain civil around my children or they will have to leave. And i know shes going to be mad about it when she finds out we are doing it at our house cuz Shes going to want to do it at hers. Shes basically trying to guilt trip me and its pissing me off at this point. Its either her way or "she wont come around anymore" and i got to the point where i told her off. They are MY kids so things will be done how I want them done and if she doesnt come over anymore that is her choice and she would have no one to blame but herself for not seeing them. She has been horrible to me in the past and i let it go so my kids could know their grandma. And boy is she making me regret it right now.