Well, I'm certainly not a counselor of course, but I do think that your MIL needs some serious help outside of what you and your wife can give her. She has to really stick with it too.
On the other hand, she sounds, to me (note above as in I'm not a counselor), she sounds like she's a manipulator, with some narcissistic traits. In other words...selfish. Yes, grief can make you unlike yourself, but oh please!
My main concern at this moment is the baby. He or she does not need to be in MIL's environment. As a matter of fact, I think that you should make sure that the baby is not in her environment. Also, did you know that a mother's emotions can and does affect the baby in utero? Yes it does! That means then, at least until the baby's born, your wife needs to curtail visits with her mother, even if it must for the sake of the baby.
Finally, but definitely not least, you are commended for being the man in the family!!! There are some less a man men who woulda given up a long time ago. BRAVO to you!!!