Dealing with other relatives

We took in my husband's sisters children 4 months 14months and 24 months in 2013 when I was expecting our only bioligical child. We legally adopted them in 2016. Their bm is in and out of prison and has not been much of an issue. However my mother in law has been. She gets mad if we don't follow her every suggestion and constantly makes comments I feel are inappropriate etc. The last 2 years she has focused on the oldest son and has been spoiling him and a I feel trying to undermine my relationship with him. Last night she told me they are more her kids then mine proceeded to get in my face and ask if I wanted to fight. This is much worse then the past but she has done similar things in the past. My husband says he know she was innappopriate. Am I out of line requesting he not have the kids around her. I know she is their grandma but she is clearly not healthy. I know she will blame the situation on her drinking and play the they are all she has card. While I do feel bad for her but I feel the kids suffer from her influence. She is mean to my bio daughter we have left with her bawling in the past. I could fill a book with the awful things she has done this is just the worst thing in a long line of incidents. How do you have healthy boundries with someone like this. We left last night with her yelling "sad when your more mature than their mom" at my children as I herded them out the door. This less then an hour after I got there and only about 5:30-6 p.m.