Ok ... sometimes we hit 'spots' in this and when there is some confusion its best to sit and do nothing.
I am not so sure given the sitch if I would re-fi at all at this point, maybe put that on hold and wait ... wait till things are more stable for you, between your W and yourself.
As far as her ruining your credit ... yeah that's the part of this 'still married' thing that's tough, so to protect yourself you either have to separate your finances, or at the least have a separation agreement in place. For me my W and I had this in place, I was not legally liable for what she did after that set date .... protect yourself and your kids.
As far as the In-laws they can insist all they'd like but if your W is wayward she is wayward, just like you they can not control what she does. You can still go through this and honor your M... not your place to tell them, nor is it their place to tell you what you should do ... its their daughter who is wayward and they will be in her corner when push comes to shove .... not much you can do about this but take charge of your life.
