I think you need to follow your husband’s lead on this. This is his family, and he understands the dynamic better than you. It sounds like things like this have happened before, and often, in your DH’s family. You can’t change how this woman is choosing to act. Unfortunately, a lot of people don’t really understand warped family dynamics. They think that everything can be worked out through open communication. The truth is, sometimes people are unreasonable and difficult. You tried to make amends with SMIL, and she rejected it. Your DH said it has always been like this in his family. That tells me that this isn’t about you, and you can’t fix it. The family dynamic is more complicated than you are aware.
You have let this bother you for too long. You did the best you could, and now you have to move on.