I would disengage.  Not sure how old the kids are.. but it can be a tough situation.  The kids are put into a loyalty bind by their mother.. it's hard to buck her influence.  It's up to you to know whether the kids are truly feeling the way you think they may be.. or whether they are just saying things to mom that mom wants to hear.

Then again... it is your  perogative to do nice things for them too.  I'm not particularly in a hurry to do nice things for people who aren't nice to me.

You need to disengage.  Next time SD spy asks for something, smile sweetly and refer her to her father or mother, which ever is more appropriate.

One other thing I did was to explain to my 3 SSs that I was not their parent and therefore didn't have a biological impulse to love them unconditionally.  I was more like a coach, teacher or friend. They had to put the work in to get me to like them.  I don't have close relationship with them but we are all very cordial.  This is what I wanted to achieve.  If you think you can get to something better, you may want to avoid this advice because it is on the blunt end of the spectrum.

Yes, it will probably get worse. Your DH should shut it down now, by taking her phone away when she's at your home. How old is she?

If it were me, I'd do nothing with or for the kid, while being civil and polite.  Let DH take them places alone. Others might decide to hold their head high and carry on, not letting it bother them - that wouldn't be my approach, but you find what's best for you.

It has not gotten better. It shifts over time but there always seems to be acting out and boundary testing. They want me to treat them Like my own in terms of gifts and trips, but don't want to treat me like an inner circle family member. like posted above, I've made clear that I don't owe them anything. We can be kind and respectful and have a relationship, and if they choose not to treat me well...then I don't have to have a relationship with them. I don't match their cruelty with cruelty, I just check out/disengage. So at least for me, it has not gotten better but I think the firm boundaries have helped things not get worse. Sometimes I still wish I could run.

So what did your BF do when he discovered his kid was stirring the pot with BM?

I try to have empathy for these kids who are stuck with a disordered parent and learning disordered ways of thinking. BUT, empathizing with their plight doesn't mean you have to give in to it. As others have said, OP, it's time to disengage and stop doing for his kids. 

That sucks. Im sure that there is a lot to this story.

The short answer to "does it get any better?" is yes.

The long answer is: Because...

- you leave, or

- you disengage, or

- They grow up and go no contact because you are Evil Stepmother and he is Deadbeat Dad

- They invite you to therapy sessions to figure out why their lives are crap and somehow you are to blame, but they are "willing to get past it", if you are willing to apologise for messing up their lives for them.

- you focus on your bios.

- you do not speak of anything important in front of them.

So...look foward to hearing more of your story.