Hi H....
My former mil was very intrusive with my first two kids, going so far as to 'breastfeed' my second son when I left him with her to go to the fair! Yes, you read it right, TWICE. The way I handled it was to do two things. One, with something like that which was downright insulting, I wrote her a letter that told her that I depend on her for advice, I love her (I really did and still do!), and respect her, but that these were my kids, my choices, my mistakes to make. Now, my former mil's temperment allowed me to get away with this. She'd of never turned her head when I came into a room. So you're dealing wih a different kind of woman than I did. The second thing I did was accepted her as she is (it's how I am dealing with my two new mil's - hubby's mom and stepmom, they're crazy women, I think being married to his dad did them in)and deal with her accordingly. I learned that some things were how she is, how the new ones are, and avoid conflict as much as possible. It means biting my tongue at times, like when my new mil told me my kids would go to hell because they weren't baptized while my religion doesn't believe sprinkling water on your head allows you to do whatever you want for the rest of your life and still guarantee heaven!! I eventually said something to her. But I just try to play nice, keep the discussion superficial, pick my battles. Your husband should not be taking your daughter over and just letting it go if it's important to you. in your case, I wouldn't be able to deal well with a woman snubbing me and possibly inciting me with words, I would write a letter and pass it to a friend to proofread (not husband) to be sure I am not going off. Ask for a truce. Then, the big thing, don't look to her to babysit or help you out. Sometimes, when we lean on people, they assume too much control. The kids are confused by it, we get frustrated by it, and it ruins what COULD be a great relationship. My former mil and I are still friends, still hug, still keep in contact, and still say "I love you" on a regular basis, but it didn't start that way! It took me looking inside and her stepping back when I asked nicely.
Best of luck!