I wouldn't send typical birthday celebration things like candy or flowers, but I would definitely send her a card. Perhaps you can buy a blank card and tell your MIL you're thinking of her. And maybe you can mention some special memories that you continue to cherish of your FIL.
After my dad passed away, we would commemorate his birthday by doing something that he loved, something that we always associated with him. My dad loved ice cream (not the usual flavors, but flavors like peach, and ginger, for example) so we'd go to a specialty ice cream shop and get the flavors that he would have chosen, and talk about our favorite memories and stories and his terrible puns and silly jokes. He also loved making a couple of favorite meals, so we'd have one of those for dinner.
So if you associate something special with your FIL, like if he loved fishing, or had a particular hobby or interest or memory from his own childhood, you might do something on his birthday that is associated with that hobby or interest. Maybe you could make a donation to a related charity, or take your kids fishing like their grandfather would have done, or teach your kids to make homemade ice cream like their grandpa always loved so much, and take pictures of the event. Your MIL might find comfort in knowing that things that meant a lot to her husband will not be forgotten by the next generations.