J.F.
Michelle,
My mother-in-law also has a photo in her house that includes my husband's ex. Why? Because it's photo taken at an event that included the family (her grandchildren, her children and their spouses) at the time. Because it's her house. Because she can. Because my husband's ex will always be the mother to those particular grandchildren---who are also my wonderful step-children.
Here's what ANY person who marries someone who's been married before and who has had children with someone else needs to understand:
The marriage or adult relationship may have ended, but when children are involved, there will ALWAYS be history and always some level of a relationship with the ex. She will be part of family stories, memories, and part of all future events: graduations, showers, weddings, and the arrival of new generations as a grandma.
You have to make peace with this, or you will become bitter, resentful, and drive a wedge between you and your step-daughter, and if you keep on hounding your husband about this, you may push him away also. You have to realize that he chose to be with you; you don't need to be threatened by a photo or past history!
You're looking at this the wrong way---from the point of view of your own hurt feelings (and you're also throwing in all the other things you don't like about this woman and getting yourself all riled up in the process). Get out of your feelings and use your head; look at this realistically and come to terms with this.
You need to understand that your husband's ex will always be the mother to your MIL's grandchild, your step-daughter. You giving birth to a new baby doesn't give you the right to erase history (even if that were possible), even if you don't like part of that history.
All the other stuff you don't like about the ex? Unless it is seriously life-threatening (and not just annoying or aggravating), let it go. For example, when you say it was brought to your attention that she wanted to hurt your son, what does that even mean? If she really, seriously threatened a baby, I'm thinking there would be a restraining order or at least a legitimate report filed with the police. If it's just gossip and pot-stirring, you need to just drop this now.
Instead, stop feeding drama; act transparently, sincerely, and with the best interest of your step-daughter in mind. You have a long, long way to go parenting your children, and part of that includes the ex. Get on board with that, and things will go much more smoothly. Keep stirring up unnecessary stuff, and make your lives miserable. It's your choice.
I do wish you the best with this.
J. F.