My partner and I had to move in with our in laws due to a natural disaster destroying our home.

We sold the house and made next to nothing, so we’re saving for another deposit while I finish my degree. My partner runs his own business and I work part time and study full time. We have 4 kids.
We live with my partners grandfather (mobility scooter, amputee, legally blind but cognitively intact) in the main house and my partners mother lives in a granny flat at the back of the property. When we moved in my MIL complained a lot about everything. We cleaned up grandads house because it was filthy, stacked boxes, we spent weeks going through everything and asking grandad what he wanted to keep and wanted to throw. MIL was pissed and constantly making horrible comments like “oh nothings good enough for you is it?” Because we wanted to clean it up. We pressure washed the house and cleaned out and wiped down cupboards (she’s being paid as his carer and it looked like the house hadn’t been touched in years), we set up the house with railings down the halls ways and other safety things for him to be able to get around independently (I work it OT for aged care). Our lives in this house with just grandad is amazing, he loves the kids and having the kids around.
My MIL comes up twice a day normally and with that comes smoking cigarettes (she won’t smoke down at her place and then come up, but walk up here and then will light a cigarette and stand by the kitchen window and blows smoke into the house; our son is asthmatic and the kids hate the smoke), then she comes in and complains about having to do all this stuff for grandad. My partner and I have started taking on more of grandads care because we can’t stand the way she talks about doing the things for him, he laughs it off but will later apologise to us for being a burden, which he absolutely isn’t. This is met with comments like “oh I just don’t matter anymore do I?” “What I do isn’t good enough”.
Then there’s the weird things. I’ve come home unexpectedly early and found her in our room going through our drawers, she takes our rubbish out of the trash and goes through it, if we go in the pool she stands at the window her place and watches us. I’ve overheard her lying to grandad about the state of the house where it will be spotless save for a basket of laundry that needs folding (he’s blind) and she’s complaining that it is trashed to bad mouth us. We’ve heard from my partners sister all the horrible things she says about us (I’m lazy, I’m fat, I do nothing, my partner pays for everything and I’m a gold digger; we half all our expenses and both match each other for dollar into the savings account which we’ve told her. My partner keeps his extra money to use however he wants. I’m messy, the kids are disrespectful; they avoid her and stay in their rooms when she’s up because she’s only every nasty 90 percent of the time or will do something to spite me like lure them down to her house and give them lollies when I’ve said no because it’s too close to bed time etc)
If I’ve spent the day studying (in zoom classes, doing readings, taking notes) she’ll stand over me and call me lazy. My partner put his work clothes in the wash separate from our clothes because our son is allergic to what he works with. She will say things like “oh make xxxx do it, she’s just been sitting on her lazy bum all day doing nothing” and I’ll reply with “actually I’ve been studying all day, you know this” and she’ll respond with an eye roll and say “whatever that means”
She works as an admin for a company in the city 4 days a week. I usually stay in my room until her work days and will get all the washing done in one day. She’ll take photos of the washing baskets (which are in our rooms) and send them to my partners family members and trash talk me.
It came to a head where she waited for me to walk away from the kids playing and she came out and tried to power trip over the children, telling two of them to go away (they were laughing in the backyard loudly and playing, she told them to be quiet, one of the children laughed again so she told that child to go away and my other child stuck up for her and said she’s just playing she’s doing nothing wrong so she sent that child away for back chat and then called them a slur of names) I told them to keep playing and if she has a problem she can talk to me about it and I’ll deal with the kids accordingly, she said “I don’t answer to you” and I said well they (the children) sure as eff do not answer to her and they won’t be punished for doing nothing wrong. I went to go inside and call my oartner to tell him she’s started on her shit again and I heard the kids gasp, I asked what wrong and they all said “she just called you a lazy fat pig” and she said no I didn’t they’re lying. One of the kids started crying because their grandmother was calling them a liar when they hadn’t. I told her to eff off and to leave us alone and told them kids to come inside. She said “it’s MY house” referring to grandads house and my son said no it isn’t, it’s our house, we live here too and she said we all needed to learn more respect and be seen and not heard. I told the kids to ignore her.
My partner came home and went down to her place and screamed at her, told her we hate her, she’s a vile nasty women and we want nothing more to do with her, it’s disgusting we have to walk on eggshells because of her and her innate nastiness. We cancelled Christmas with her and my partners family and went to my mothers. We’ve since changed the locks on our bedroom doors to be locked with a key she doesn’t have access too, told her to not speak to us and completely leave us alone when she comes up for grandad. My partner is also looking into my grandads aged care package to see what my MIL isn’t doing because he should be entitled to more than what he’s getting and we suspect she’s deliberately not organising carers so she can be in control.
She’s gone back to my partners family saying I have him on a tight leash and I’m stopping a relationship with her son and grandchildren and I stay in my room and sleep all day instead of studying etc etc
They all think I’m the asshole. Am I the asshole for telling her to stay away from us?