NTA

She was responsible for returning the money, she most likely spent it on something else.

As a side note, i wouldn't help her with money anymore and i wouldn't keep her secrets anymore - because her husband already told you that it's his family so he should know if she asks for money and if she doesn't repay the debt.

You aren't her ATM and if your brother chooses not to save money and let her do what she wants, then you shouldn't give her anything else. Let her talk to her own husband and explain what she's done.

Also - if your brother wanted to gift money to your parents, he should send them directly so there's no need for further talks about it - and this is something he should be told.

I think your brother will find out one day that she hasn't done all those things he paid for and only then will realise that they cannot save money if she won't change her spending habits.