My situation is extremely messy, and involves so many parties, but it's driving me nuts and I don't even know what to do anymore. DH had a daughter when he was extremely young, following a situation of lying by BM in terms of contraception. DH and BM where living with my MIL at the time so she was extremely involved. My MIL is very involved in my DH life and in some ways shows signs of treating DH as her husband ( calls him to fix everything) used to call him 5 times a day even though we lived with her for a while etc etc. 

SD was babied all her life, she was 5 when I met DH and while she had been through a bit (BM) had MH issues. She refused to do anything herself and spent 24/7 with DH. DH made up for this by never saying no, she got whatever she wanted, slept with DH, has more teddies than I can count and used to get sooo many presents. BM and DH always had seperate bank accounts so everything was brought in doubles. DH never had any boundaries with SD and could not say no. MIL always impressed SD should get what she wanted and should always come first over anyone else. Once SD was 6 I believed she should sleep in her own bed, and start doing things herself, MIL did not agree and was dressing her up to the age of 8. She would make SD get changed in front of DH so she has not developed any sense of privacy- she is developing and I do not believe she should be naked in front of DH now. 
 

SD now 8 is showing serious signs of not having boundaries, she walks around ( in our own home without MIL) with tops open all the time. She whines and sulks whenever she doesn't get what she wants, or in trouble, historically both BM and DH then go to all lengths to cheer her up and any benefit of telling her off for things where she has been in the wrong are gone. She just sulks to get attention, she expects everyone to do everything for her, and wants everything given to her. BM has her half the time and still buys her stuff all the time, carries her around ( she's 32 kg) and never says no. She feeds her so much bad food. DH used to carry SD around all the time, but has agreed to stop, but I see jealousy in his eyes seeing BM doing it. He's so resistant to change, he often takes over and does things for her, and defends all bad behaviour. I get frustrated as I buy her new things and they are ruined within a day or 2. He defends her which I say won't help her at the end of the day. We have rules at our house, but I see DH resents this sometimes, he used to be the favourite parent but this has changed. I try showing him we are going the right thing- I mean she cries for a power cord not working because she hasnt turned it on ( like full out bawling). She acts like a baby all the time and it's so frustrating. 
 

to top this off DH and I have a baby, who MIL hates and has said to BM that no baby will ever be as special to DH as SD, she has an over the top relationship with BM and invites her over for dinner all the time, yet not us. 

i feel like I'm always fighting with DH as he's resistant about changing things and reverts back to old habits with SD yet he's quite happy to ignore our baby and not see her for a while, yet I know he was very very involved with SD. I just don't know what to do anymore. I know MIL has poisoned him to be a certain way with SD but it's driving me insane.