It sounds like she desperately needs therapy, and probably medication, but is too self-conscious/afraid to admit it. You recognize the problem, but there are limited things you can actually do to fix her unless she is willing to accept help. It is also a losing battle for you to do it alone. She is your SIL, right? Where is your husband in all of this? You need to be very careful that she does not suck you-and more importantly your kids- into her destructive cycle. Make sure you talk to your husband about your fears and, since it is his family, let him know that you NEED his support in handling the situation-and also make sure that your in-laws don't dump this entire responsibility on to your shoulders. Find a therapist that you think might be able to help her, and if she won't willingly accept it-then understand that you have no authority to make her accept help and you may very well have to establish a significant amount of distance between the two of you for the health of your own family. Do not feel guilty about having to do that.
In any case-you need to check with your local authorities, or any therapist or social worker and find out what steps you should take if you ever feel that she might physically harm herself. If she were to ever threaten suicide-you CAN contact the proper authorities and force her in treatment, even if it is only temporary while she is evaluated.
It is hard to watch people we love struggle with instability, depression and destructive behaviors. I hope she gets the help she needs.
And if she is just an over-the-top crazy drama queen-I hope she knocks it off, moves on with her life and doesn't become a creepy stalker.
Either way-best of luck to you!