Why is she doing this to me?

My story is a long one...but I'll shorten it up. In 2001, I placed my baby girl in open adoption. 10 mos later, I met the man who would be my husband. While dating, I told my husband I didnt see our relationship going too far due to the fact that he had a 2 yr old daughter from a previous relationship. In my heart of hearts, I couldnt see myself raising someone else's kid when I couldnt even raise my own. He made it clear that he understood my feelings on this. We were away at school when we met. After finishing, we moved to my hometown, which is about 300 miles away from his. Things were pretty good...we got married, I got preg... About a month after our baby was born, we fell on some hard times and was going to be evicted from our apartment. Having no where to go, my MIL offered to let us stay with her....which meant us moving our lives 300 miles away. I was very iffy about the situation about his daughter...I told my husband this. He just kept reassuring me that everything would work out. When we arrived at MIL's house, I made the mistake of telling her about the child I placed for adoption. All hell broke loose over the next 4 mos. MIL called my child a "BS excuse" and lectured ME on what my husbands daughter needs...." She needs a two parent home, she needs stability, etc.." I then again reminded my husband that I couldnt even provide a two parent home and stability for my OWN child, WHY should it be MY responsibility to provide it for his kid? It didnt stop there. I was more or less taunted by MIL that my husbands kid is HERE, and my child is not. She basically rubs it in my face by constantly (and I do mean constantly) talking about my husbands daughter, the girls mother, and she more or less told me that she cares more for my husbands oldest kid than our baby because well...."She's been around longer." She is also very controlling. She will take it upon herself to arrange with the childs mother WHEN the child comes over. And my husband does nothing about this. He wont stand up to her reguarding the favortism, the way shes treated me like dirt. He agrees with me privately that what she is doing is wrong...yet he wont stand his ground with her. I feel like she is the one married to my husband and she is the mother of his child. This woman has no respect for our marriage or my decision for adoption. It is now to the point where I am ready to tell her to take her obsession with my husbands daughter and shove it, take my baby and leave. I did make the mistake of marrying my husband first without knowing his mother, or knowing of her obsession with this child. My husband never led on that his mother was of that character. But I cant stand it anymore.