Its an uphill battle. I may have posted this on your last blog, but our BM took SD's phone away for 2 weeks for bad grades. Each quarter she got a D or F BM told SD, it will be ok.

Its not ok. SO found out and now has stepped in. They make no sense.

The BM could be exercising her rights as the mother, and using those rights to her advantage to make you look like the "evil stepmother" and make her look like the attractive parent.

I know you genuinely care about raising your SD right, by trying to correct her behavior and laying down consequences for her actions.

All the bm probably cares about is being the "winner" in situations like these. What saddens me about this situation is the bm does not know she is setting her own daughter up for a life of hate, trouble and failure JUST to look like the more desirable parent to be with.
(no conesquences to her actions = I can do what I want and get away with it with mom, not dad and the SM. I like mom better) OR she could be one of those "my baby does NO wrong" mothers, which will still create the same life scenario.

See the picture I am painting?

My experience, you can only do so much. It sucks to know you are almost useless in this situation, because you are the SM. Your husband will have to step up to the bm and try to work things out with her. I can see it now, if this continues, and the bm continues to baby her daughter and seemingly "reward" her daughter for ugly behavior, when your SD is older (say 15) and she becomes more of a problem than she is now (legal trouble or lying, boys etc...) then the bm will probably cry to you and your husband for help, or just hand her off to you two, and make her "your" problem. Good luck THEN trying to go back and teach the kid the right way.

Good opportunity too, to see what the bm's motives are.
If her daughter "does no wrong", she is genuinely a shitty parent, and she is not out to make you look bad.
If she just tries to counteract your efforts of discipline by "rewarding" your SD when she does something bad, but does in fact put her foot down once in a while to correct the SD's behavior, then she is genuinely trying to look like the better parent.

Figure that out, and work from there.

Ok, sounds like you have a shitty mother AND a bm who tries to sabotage your efforts.
Don't worry about sounding aggressive...i get it. Best therapy...let it all out.

I know how frustrating that can be. I went through that in my previous marriage, and the thing that sucked the most about that is my exh didn't care too much for the kids either. Now the kids are lost, and under their mother's control. The thing they need the most is a parent. Someone to guide them while balancing the love and attention. DON'T GIVE UP. Don't give up on your SD. It will be a battle, but she will ultimately thank you, one day, for teaching her right from wrong and being there for her no matter what.

It's hard to figure out a way to co-parent with someone who tries to take the reigns 100%. "we tell my SD you need to work harder in school to bring your grades up then BM calls my DH and starts to freak out that her grades are fine and we shouldn't be harassing her"

You and your H need to stand up for this little girl. You know what the real world is all about, and what it takes to function in it. Your SD might favor her mother because it is "easier" with her. According to SD, that is all she knows of the real world. (pre-packaged foods for eating and men in and out of bed) is what she sees...not healthy!

If you honestly care for her, don't stop fighting to raise her right.

Maybe you and H can figure out a system...that when she is at your house, what you do with her is YOUR business, and how her mom parents her when she is at her mom's is HER business. If the bm doesn't agree to this, put your foot down and set some boundaries.

Is this boy a student in you SD's school district? In our state that is considered bullying, and can result in suspension. Notify the school administration and maybe they can make BM see the error in promoting this behavior.