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Resolved Question: Issues with "sister-in-law"?

my brother-in-law is 32, has a 1-year old with a 23-year old woman while he is still married to another one. he cheated on the mother of his child, so of course this girl has lots of issues. they fight all the time, she is on antidepressants. goes to therapy and still is jealous of even me!!!
my husband and I both finished nursing school, he has a job, i still don't. we were supposed to move into my in-laws in december-january!! the brother in law was also supposed to move in, and passively always joked about how he wants the larger, further room in order to play his video games and my husband joked about the fact that we are married and we should have the larger room!
We were at the dinner table, talking to my mother-in-law about moving in there, when the brother in law pops up and says "no, can i have the larger room because the mother of my child and my child are moving in here too?" she was in her room, didn't bother to come out and say it, this was news to everyone! to which i said "fine, we're not moving in any more, I'm not fighting with anyone over a stupid room, it's just a room!" my in-laws cannot house 5 people, my mother in law is getting knee surgery in a couple of months and i don't wanna make their living harder.
the situation is pretty tense right now, i don't like the fact that that girl hates my mother in law (she considers her responsible for how my brother in law turned out and she is convinced that she covered for her son when he was cheating! even though she agreed to make a baby after 3months, brought shame on the family and only met the family when she was pregnant) and she will now take advantage of her in order to finish her school. she expects everyone to help her, always "pulls the baby card" on everyone, has millions of issues and cannot even be respectful enough not to make stupid remarks all the time about how he cheated on her.
my husband and i are both 25, i feel sorry that my husband never had a role model in him. our living situation is pretty tough and i wish i had some help until i pass my exam and get a job in a bigger city (because there are no jobs for new graduates where we live)
my question is, do i just smile and nod next time i see them?i want to forgive them right now, i don't even want to see them ever again, i feel like they are so low!!
thank you for any suggestions!
oh, and the in-laws of course love the baby, know the girl is trouble (she fought with my mother in law twice) bu prefer to be nice and help the older son, who was always the black sheep!
@Tina, thank you so much, you are very wise. I didn't think about putting pressure on my in-laws, i love them to death- i just have conflicting feelings about my brother-in-law and the mother of his child!

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Jeopardy! Platinum Edition, Game Boy, Video Game Accessories:GT Interactive