Just out of curiosity, what is she "helping" with? Your kids are old enough that she shouldn't have to take care of them. If she doesn't like the way you run your home, either she can help with cleaning or she doesn't need to come over all the time. She should NOT be talking about you to anyone. She should be mature enough to discuss any differences with you.
About disciplining your children- they are YOUR children, she has raised hers and as far I'm concerned if either my or my husband's parents ever tell us how to raise our kids, I'll tell them (politely of course) they can go fly a kite!
Obviously, this is a touchy subject with me, too! :) I completely understand and can totally relate. My MIL ignores any instructions I leave her when she watches my daughter, everything is on her terms as far as when/where we see each other & she's manipulative. She has an outside appearance of being nice, but she's very good at playing the guilt card. (Example- She told my husband she was making a "huge" sacrafice for him b/c she would be flying home from a conference at midnight the day before his birthday just so she could spend the day with him, but she also made sure to tell him that he would have to come pick her up from the airport at midnight. Big sacrafice for her...He's 33 years old. He doesn't really care either way.)
Anyway, before you get too upset- Have you really talked to your husband about how it makes you feel? I have found that my husband can be very defensive of his family, just like I am of mine. When I attack him verbally, he will automatically put up a front and then nothing gets accommplished. I have to talk to him VERY calmly about what is bothering me. I will prepare an entire conversation before I even approach him. These "talks" with myself really help me to sort out my thoughts and figure out the best way to say what I want to. My husband thinks I overreact, too, but right now my defense is that I'm pregnant! :) Not really, but I think it might have something to do with it.
Have your husband talk to her and see if maybe they can work out a schedule for her to visit only certain days of the week.
Another thing, don't go to your room when she's around. I know it feels great to escape, but she'll never get the hint if you do this. If all else fails, you might have to bite the bullet and let her know, very matter of factly, that you would like to have some family time. Let her know it's important to you and just ask her to leave if you have to.
Sorry this turned out to be so long. But I wish you luck! Family is so hard to deal with. I'm slowly learning if I don't stand up for myself, I can't count on someone else to do it.