Sis Rasema, I know you mean well, but the mother-in-law isn't sitting on the street homeless. If she were, it'd be a different matter. The reason Allah has given women rights is to prevent such abuse and misuse of what is theirs in the first place. The sister is merely using her rights stated by Allah and there is no logical reason to give the house to the mother in law.
Tomorrow, the uncles children can demand Mrs B's children give them their house. Where does it stop sis? Greed fuels greed. No one was more conscious of Allah than our beloved Prophet (saw) yet when he was approached by a begger, the Prophet didn't give him anything but advised him to sell what he had to buy an axe and chop wood for a living.
If someone is doing wrong, you simply do not 'help them in the name of Allah'. Where is the benefit in that sis? It is far better for their deen, dunya and hereafter if you make them realise the error of their ways. This is how the mother-in-law in the O.P's post needs to be helped - not by pleasing her by giving in to whatever she wants.