JT, you haven't blocked her access to his FB account? You haven't blocked her from emailing him? Why not? That should have been the first thing to do after the harrassment started.
Your MIL is mentally ill. You and your husband should just accept that and stop worrying about the things she says and does. Since she has aired all your past confidences, there isn't anything left for her to use against you. If anyone faults you for cutting her out of your lives, too bad. If they ask you, tell them why. The worst thing you can do is stay quiet about the way she treats you and your son. People who bully depend on you being quiet about their bullying. (And they call it gossiping when you rat them out - that's more of their bullying, by the way!) Don't be quiet. Tell, tell, tell!
You are in the drivers seat here. If you can identify who tells her what your family plans and does, then stop inviting THEM to your family functions. Good grief - who runs off to the crazy woman who makes the family's lives miserable and tells her "Janey's party is next month!" so that she can start screaming to everyone who will listen that she isn't invited.
You and your husband are doing what every mean and nasty person wants - listening to her ridiculousness. No more reading her emails. Instead, block your email address from her so that anything she sends won't come through. Block her phone number. If she mails something, return it unopened. She knows that she can still get to your family using these other means since her son won't talk to her - plug up those other means.
She seriously has to be cut off so that there is space and time for her to think about the havoc she is wreaking. After a long absense from your lives, THEN if she asks another family member to talk to her son on her behalf and ask for another chance, then possibly what he could do is say that he will agree to ONE meeting. If that meeting ends up with her acting like a shrew, then that will be the only meeting. And let her know the terms of that meeting beforehand. Boundaries, boundaries, boundaries.
The reason you are hurting so much is that you are letting her hurt you by giving her an avenue by which to do it. Cut off those avenues. Nasty people HATE being ignored. They poke and prod and fight and show their butts because you LET them. The FB and emails are so easy to stop - why haven't you done it? I'm really shocked at that. Don't be a martyr here, JT. Stand up for your family and just cut the ties, period.
Dawn