Boopers, I'm so sorry this has happened! Had it been me, I would have refused to pay her back. She can afford to be without the money, you can't. BUT... you probably did the honorable thing.

You have every reason to be hurt and angry. And what business is it of your SIL?? It's none of her concern... unless she's going to get that money instead!

I would put distance between you and your in-laws, but I would think seriously about not having anything to do with your MIL. Although she sounds like a very cold person.