I agree with Krista--talk to an attorney to make sure that have all the i's dotted and t's crossed in order to legally evict the Ex, and do this before the meeting.
Do let CPS know of the situation, and perhaps even the family lawyer/court re: custody of the stepdaughter. The step daughter should not be in a situation like this, where her mom cannot provide her a place to live (without freeloading); if the Ex cant provide a place for the SD to live, then the SD should live with you.
And definitely cut off all other $ going to the Ex that is not court mandated. Hair, nails, etc.??? No. If she needs more monetary assistance, she needs to get a job and/or contact family services for assistance for her _necessities_ not her luxuries.
Stay united with your husband--it sounds like he does want this resolved. Focus on the SD: let him know that you want to see her taken care, absolutely, 100% and you are right there with him on that. And that means that she should come live with you guys until the Ex is on her own two feet again with a decent place to live and the ability to support her all of her kids.
I know its probably incredibly frustrating when you could see this coming a mile away, but absolutely avoid the "I told you so" and the "it's your problem, you fix it." Focus on your husband's willing to fix this, and remember that once you let yourselves get divided a couple, it's really easy for that division to turn into a canyon too wide to cross back over...
I am so sorry your family is going through this, on top of all the other really difficult things you're dealing with....