It's so hard to seem them act so cavalierly about disentangling our shared lives, isn't it? I'm so sorry he upset you.
But you know what? You asked for his help and he responded in a light-hearted, friendly manner. That's not all bad. Also (and I know it's easier to say this from the outside looking in), he may have been following your lead -- assuming that you were comfortable with the conversation since you brought it up.
I agree with zew -- no reason to cut ties with MIL just yet. Chances are she thinks her son is a fool too but doesn't feel comfortable saying that to you because of her loyalty to him.
