E.E.
Next time use the "would you like some bean dip" approach. It really means - change the subject. It works like this:
"Oh dear, I have no idea why BIL is so obsessed with me or where he gets these crazy ideas. Would you like some bean dip?"
That last sentence could be ANYTHING benign -
"What did you think of that storm last night?"
"Did you see that funny video with the cat and the turtle?"
"Did you watch the game last Sunday?"
"Did you see the latest episode of Game of Thrones?"
"Can I show you the pictures I've been painting?"
"I saw the best movie last week!"
"I am reading a really interesting book."
"I had so much fun with the kids at the pool this morning."
Yes - after you stand up for yourself - not by DEFENDING yourself, but by DIMISSING the subject - the next thing you say can be ANYTHING that changes the subject. These people are drowning you. Stop wading into their ocean. They can't do it if you don't play your part.
And hubby probably isn't going to stand up for you. Grieve for the man you thought he was or hoped he could be, accept that he's not that guy, or that there isn't much he can do, and find SOMETHING else to think about.
The best way to win this fight is for YOU to dismiss the subject any time someone tries to talk to you about it - by acknowledging that BIL sure seems to have some odd ideas about you and it sounds like he likes to talk about them - do it CALMLY - like it's FUNNY or not worth your time - and change the topic. Eventually, this drama will die because it cannot play without you. Truly.
It doesn't matter that you haven't done this up to now. Just start. At first, it will be hard. But after awhile, you'll truly lose interest and be free of it.
Best of luck to you,
e
ETA: To your added question about divorce. Sure, people would. But in truth, until you learn how not to respond to these kinds of people, they WILL keep finding you.
Divorce would mean you'd given this and them a LOT of power over you - is that what you want? Do you enjoy your marriage otherwise? I have an in-law who nearly drove me to divorce - and my husband could have and should have learned ways to stand up for me without adding drama (example: when I mentioned something [worth celebrating] a family member had shared on Facebook, she sniffed and said "Oh, you're one of thooooooooose", with disgust - he COULD have and should have said something about how he liked Facebook - so not defensive but just shutting her down. This went on about EVERYTHING about me for so long - and it became the central subject of my marriage for so long. This person is no longer welcomed into my home and I avoid interacting with her. I expressed to my husband how bereft his silence in the face of this kind of sniping left me. And I moved on. How delighted she would have been had we divorced. :/)