Your wife isn't saying or conveying anything that I didn't say and convey throughout my MLC. Remember, a MLCer first convinces themselves they know wtf is going on and then they try to convince everyone else. So far, her mom ain't buying it but confrontation will not wake your wife up. In fact, MIL is just pissing off the rebellious teenager in your wife.
Try to get MIL to stop it but if she doesn't then just leave her be and whatever you do, do not participate in gossiping with/to her about your wife.