Looking back now I really think I should have seen some warning signs and ran as far and fast as I could. I was "blinded by love" or some such foolishness and although it's been a long hard road I do feel like we will survive with our sanity intact.
An unfortunate consequence to our finally being able to see things as they are is that SD(13) no longer wants to come visit. I could write a book and maybe some day I will. The condensed version is this;

BM and SD were unhappy with me no matter what I did. If I tried too hard I was overstepping my boundaries and if I didn't try hard enough than I was awful for not loving her like my own children. I nearly drove myself crazy trying to be the "perfect wife". I tried to not upset SD and be the best mom/stepmom I could be. It wasn't working as BM and SD became more and more demanding, insisting that DH divorce me. Though counselling I have learned that I was set up. There was no way I could have won this battle. DH now thankfully sees it too although that doesn't mean that he doesn't still do the "guilty daddy" thing sometimes. After my counsellor explained that BM or SD would never be happy I finally got it and decided to stop doing anything to please anyone. The very first time SD came and began her usual antics I told her that I was now in charge of the house, not her, and her poor behaviour would no longer be tolerated. She went home. She has come 3 nights so far this year. I do not go out of my way to be mean but I speak up if something is bothering me. I also made a rule that if DH wants to talk to BM on the phone he must do it in our bedroom with the door shut or at work. Before he would sit in the kitchen and the kids and I would have to watch him talking to her, we can always hear her as she screams at him and he just agrees to everything she is saying to get her to stop yelling. I don't want my kids to see him being so "ball-less" and it really is a huge turn-off to me as well. So far she's called 3 times and everytime I tell her he's not there (he asks me to). She is not welcome on our property as she put on a huge production last time and I ttold her the police would be coming next time she came to the house.

I do feel like I made alot of progress and the biggest was realizing that I was set up to fail in the beginning. There was nothing I could have said or done that would have changed the outcome, other than leave DH, of course.

I do hope as she gets older that she will realize that the things BM has put in her head are BS and that she will want a relationship with us. DH has decided to not persue a dna test and doesn't wish to force her into spending time with us so she may just decide to never come back. I don't understand DH's decision, if it was my child I would fight to keep them, I certainly wouldn't let them walk away.