It's not too late.

I read this article recently and it reminded me of so many skids on this site.  

https://www.scarymommy.com/parenting/part-time-jobs-for-teens-benefits

I remember being a shy, introverted kid.  Afraid to order and ice cream cone at mcd's, but my parents made me, and I got over it.  Super nervous on my first day at my first job, but really needing the money.

Adversity toughens people, they need it.  It build resilience.

...actually said he is going to suggest that SD18 get welfare benefit...

States don't hand out welfare benefits to single adults just because Daddy thinks it's a good idea. Single adults in most states find it extremely hard to get benefits. And the benefits may be time limited.

I don't think it's too late. Many people have changed after 18. Since she sews (I'm assuming that's how she makes the costumes) could she have a future in tailoring or being a seamstress? The few that are around here are always busy. Doll making -- sell through Etsy or at craft shows. 

The one thing he needs to do is stop giving her money. Giving her money is not incentivizing her to adult.

It sounds as though your SD is just trying to avoid adulthood.  She wants to be a dependent and child-like for as long as she can.  As long as no one challenges her fantasy, she will remain dependent and continue to live in her bedroom playing video games etc...  I think that your DH needs to sit down with her and tell her that she is becoming a young adult now and that those days are quickly coming to an end.  She needs to start thinking about her future.  

I also think that you should take your proposal of her moving in with you, off the table.   From the sounds of things, your DH will never be able to enforce the "live in our home unless she signs a rental agreement, has a full time job, and will pay rent" portion of your proposal, so you're best not to even go there.

We had pretty much the same situation with my YSD when she reached 19.   She would only find part time jobs, because she just wanted to hang out with her boyfriend in our basement and watch TV the rest of the time.  She would volley between her mother and our house depending on which parent was putting pressure on her to start adult-ing.  It was clear to everyone that she was just being lazy and that she was enjoying the year long holiday from school and responsibilities.  She refused to clean up after herself, and just asking her to do her own dishes before we came home from work, so that we would have clean pots to use, would always end in a big fight!   We finally got tired of the constant drama and disruption that she brought to our home, so we sat down with her and said that she needed to either go stay with her mother, or find a place to live on her own since she wasn't willing to abide by our house rules.  So she went back to her mother's house but they were always at war, so she finally "launched" from there at the age of 20. 

It's possible that a straightforward conversation with her might set her on the right path.  As long as everyone sticks their heads in the sand and pretends that it will sort itself out, she will take that complacency as acceptance and nothing will ever change. 

Not too late!   Doesn't the Dr. Phll show have those straighten-up-and-fly-right camps for young adults who are going down the wrong road?   I think they work except for a few that have backfired (catch me outside girl?)

Hmmm maybe we should all invest in those type of camps.  Seems there will be a lot of need seeing these lazy/guilty parents abdicated their responsibililties and now someone else has to do the dirty work/clean up  after the fact.

Having rental property, when some applicant gives me a sob story about being homeless, that makes me yell "NEXT!"   There are VERY few reasons, especially in my area, for anyone to be homeless UNLESS they have a serious drug/psych problem they REFUSE to get help with.  Don't need the drama.

I agree that it isn't too late but BM and Him need to show her some tough love. 

Timelines to get a job, pay rent, sign up for one class at community college. It doesn't matter what the class is, but something. 

18/19 year olds don't have to be given up on, but they do need a reality check if they aren't doing something with their lives. 

That's what my DH said about his SS and wife never thanking us for anything and expecting people to do things for them while my kids mail a Thank You note every time we give them a birthday or Christmas gift or go to visit them! DH always says he doesn't know what he did wrong. I do. He didn't teach them to be givers instead of takers. He didn't make them help at home growing up. He felt they should not have to have a job in high school. Let them be kids as long as possible.  Ok, this is what you get. 

It is sad when the kid is "lost." But it's not my fault and not my problem.

I don't expect SD15 to ever darken our door, BM and her family won't let her fail, but they probably won't let her launch either. We only hear from her or BM for money and I don't expect that to change.

DH has gotten better at saying no when he realized he was being used. The thing is he would spend money on just about anything SD15 wanted if she only answered the phone once in a while but she won't outside of birthdays and holidays and then gets annoyed when he won't drop hundreds on whatever she wants.

Hospital is behind us, we have failed miserably to address the broad issues of mental health and supporting those who suffer from mental/behavioral/developmental "illnesses", and as importatly providing guidance and systemic support for their families..

While I am NOT a propent of "lock them up" by any means, neither do I  believe that it is acceptable for them to be living on the streets, endangering the public, being a detriment to businesses, etc... and most importantly being a danger to themselves.

Most recently I was driving through a part of the city where the homeless congregate. It was sad and dangerous. For them and for everyone else.  I saw an obviously disturbed man step in front of a moving car and barely dance out of the way while laughing, bowing, etc... The driver evaded and slammed on their brakes.   He then did it again as he got to the opposite direction lanes on the road.

I am a proponant of making them wards of the state, having them managed by courts and support/social work organizations, and have them medicated, forcibly if necessary, to mitigate their danger to themselves and others.  In critical cases, a access/egress limited facility should be on the table and used, though sparingly.

Horders is a particularly sad show.  I avoid it except on rare occassions and only then as a click by when I am finding something to watch on the tube (yes I know, we are long past the tube days).   My ILs were on the verge of being  Horders show candidates.  They just would not get rid of anything. The prototypical example was my MIL's dozens of file boxes of categorized discount coupons that she put countless hundreds if not thousands of hours into when she cashed out her retirement from the State to be a SAHM with their youngest and was completely convinced that she could "save more than she had earned" by couponing.  This was years after all of the coupons had long expired.  She was manic over tossing those file boxes because of the ridiculous amount of work she put into it.

Then there were the piles of worthless old clothes, furniture, bills, etc, etc, et... from my MIL's and FIL's parents and grandparents.

I recommended to my DW and her sibs that we send the ILs on a week long vacation then have 30yd dumpster brought in and we clean everything out.  You would have thought I recommended that we just torch the entire property.

Meanwhile back at the ranch and years later, the "kids" did have a dump it all weekend.  MIL was pissed off to no end over it but they all did maintain a united front when MIL went fang bared/screaming banshee on them.

I was over seas at the time so I was the Golden man while MIL was ready to dispose of the bodies of all 4 of her children and the spouses of the other three... as well as any then very young GKs who helped trash MIL's "treasures".

Part of the problem... MIL will not take her meds as they make her "numb and completely disconnected" and when she does take them she only takes half of the Rx'd dose due to the decades long concern about the costs.

On top of those challenges, MIL has a Casino problem and for decades was of the mind that she would win massive wealth and fund retirement for she and FIL.   Nope, never happened.

My DW, the graduate degreed highly successful CPA IL spawn, eventually put MIL in front of an investment advisor who has locked down almost all access MIL has to any money other than a modest "allowance" and manages her money to the cent.  The advisor pays all of her bills out of her accounts, gives her permission to have repairs done on the home, buy a newer car, etc.... DW and the advisor are on calls regularly adjusting the investment allocation, budget, etc... for MIL.

MIL used to be faced with a looming homeless retirement catastrophe. Not any more.  She will now be okay. Her home is safe from foreclosure (the first time in the nearly 30 years since I showed up), has a decent level of investment, and works for the State.  Though she will never be able to actually retire. Fortuneately the peoples republic of SpermLand does not have a mandatory retirement for aged State workers so MIL will be able to work at least part time until she passes.

I am just thankful that my DW will not have to see her mother at a homeless camp under an overpass somewhere.  Not that I/we would ever allow that to happen. At least now, MIL has the pride and self respect that comes wiith having provided for herself.

No matter what she signs or tells you what she will do.  Once in your home she will get fired for not showing up at work.  Then there will be no money for rent.  She will be at your home playing games and sewing next year's Halloween costumes.   AND DH will go along with it .   
It will end your marriage.  No self respecting adult can live like that.  Better to pay for a room somewhere then having her live with you..  THINK.  Any BM who will put there kid on the streets   That kid is a loser.  She may need mental health help

No, no, no, no, no. She does not get to move in under ANY circumstances. Tell your husband that if she moves in, you move out. After all, that is exactly what will happen if she moves in, ignores the contract and decides to freeload for the rest of her life. Your husband is going to want to take care of his daughter and you won't be able to stand living there. So why delay the inevitable? Tell him the deal up front, it's her or you in your home. No beating about the bush.