OK, here is the halacha, Yes Kaved es avicha v’es imecha does apply to in-laws. That was discussed here many times.
In addition being dan l’kaf z’chus also applies to in-laws. I can see and understand that you are very frustrated. All I can suggest that will be extremely helpful is that you learn how to “coach” your MIL. You need to learn how to listen to understand her an not take everything as a negative. When she speaks just repeat what she says so she thinks you are listening and getting it. That is all she wants, then of course it is up to you to make your own choices. You can add a “is that how you raised your kids, thats interesting.” just to sweeten the pot. But remember that it is up to you to make your own choices. By learning how to coach her you can steer her in the right direction without hurting her feelings while feeling like you are in control and not getting hurt yourself. So if she makes a comment about a friend of yours you might say “Ma, why does that bother you?” or “Why do you allow that to bother you, she is not someone you see often or you spend time with so why let that bother you so much?” In that way you are initiating a conversation in a non-confrontational way, and forcing her to face her negativity.