I think it is good that you guys are seeing MC together. What I am wondering is if the MC has some training in sexual issues. I am not saying a sex therapist, but rather a therapist who can assist you and your W in navigating through the very sitch you described about your parents.
Your W needs to decide to continue holding on to the notion that your parents MUST change or else. I mean, my former ILs were pretty conservative Catholics and I didn't begrudge them for their beliefs. In my view, your W is too tied up in trying to change your parents' values and views.
Yeah, I do think that they went waaaay overboard in meddling with your parenting styles and going off on Jerry Sandusky. It is patently obvious that they have some sexual hang ups that unfortunately spilled over in your home.
Heck, I took baths with my mother and cousins when I was a kid. I am perfectly fine. I love the fact that your W is very comfortable with her body and there's no shame in it at all. You two are great in that area.
As the saying goes, not only are you marrying your wife/husband, but you're also marrying their family. So true!