Tough stuff. In my life I guess you could say the difficult MIL has been my mother! And-as everyone has said-it has been me to a large extent that has had to stand up. You boyfriend will have to be the one to stand up. It may take time, there may be reasons he can't right now. It doesn't mean he agrees with her, but its hard when you want your parents approval, or when you're living with them.
Let me make one thing clear first-my mother has a mental illness. She's better now, but back then, she was very bad and not taking care of herself.
When I started getting to know my future hubby, and I could see this was going to be the real deal, my mom flipped. She never wanted me to date anyone, b/c of partly fear (the cf thing), and partly she didn't want her children to be happy if she wasn't. (she did this to all her kids when they dated)-so it wasn't just me.
Behind my back, she called my boyfriends mother and told her that I was going to die and leave her son a widow, I was selfish for wanting to marry, I could never give her son children, I was adopted so I was too messed up to be a wife. Let's see-what else?.....Totally trashed me, my repuatation, she actually made up lies about my repuatation, my morals. Bad stuff. I never found out this happened till I was married! Fortunately my then future parent in laws realized this was a crazy woman, and didn't listen.
But, that and countless other incidents did cause alot of heartache for me and my hubby durign our engagment and early marriage. We should have just said-screw her-and not let it bother us. We should have distanced ourselves from her, but we didn't b/c I felt bad for her. And it caused alot of fights between me and my hubby.
Be totally honest with your boyfriend. If he's the real deal, don't give up b/c of the mother. Work it out. Just remember-and make sure your boyfriend remembers-if this is her personality, you probably won't change it. So, YOU two need to come up with the solution. And if that means distancing yourselves until she realizes you're not going away-so be it.
And tell him to talk to her. As a man. He may have to use words and force that he's not used to. But he better get his point across. This woman, like my mother, has no concept of boundaries. For whatever reason, she never learned them. So you've gotta teach them to her.