You have your hands full but congratulations on being so industrious and ambitious with two littles ones to care for.
No where in your telling the story did you mention, your husband or his interaction when these events have taken place. So it feels a little onesided. If he is in agreement with you and your concerns. He needs to talk with his mother and you may need to develop better boundaries. Perhaps only allowing supervised visits with the children where you try to buffer the conversation.
I was trying to raise my son with out having him exposed to candies before he was six years old but his paternal grandparents would give him various candies while he was with them. Even after I spoke to them about it they still insisted on giving him candy. I know to many this may seem like not such a big deal but it was to me.
Ultimately they continued to expose him to candy but I continued to prohibit his candy intake. He is 14 now and enjoys breaking my rules with their help occassionally but there are consequences for these things. My son has had to have some dental work done. The dentist specifically targeted the problems to his candy intake. Now he listens to me more and them less because he knows I really do want the best for him.
You can show your daughter how to not be afraid of things and to face her fears. Where things are totally not true, you can be the one who shows her the truth.
In her lifetime there will be many people speaking beliefs, thoughts and other things into her head that have nothing to do with the truth but you continue to maintain an open, honest, and supportive place for her to come to hear the truth and to gain solice from a very scary world.
Try not to trouble yourself over some one you can't control. You can only control you and how you respond to this situation.