The dangers of living with your ex-mother-in-law

Well it's gonna be another of those bitching posts, but if I don't use my hands to type I fear I will use them to choke the life out of someone!
I cannot remember if I have told you this before but BP's mom is my room mate (I will pause here for you to add your WTF's) I will try to condense this.
She was busted for possession a couple of years ago. You may or may not know this but a drug felony means you lose all kinds of things. In her case she lost her Section 8 (which paid her rent for her for over 20 years) and her food stamps. She had absolutely no chance of making it on her own.
BP and I had just got the house that I still live in. We were excited because it's ginormous and had 3 bedrooms and 2 bathrooms. I had never had 2 bathrooms before! We heard of his mom's plight and decided to take her in.
Flash forward 10 months later, BP is in jail but guess who's glued to my couch watching talk shows? What started out as tolerable has turned into adopting a very large, very old child.
I don't mind doing most of the work around the house myself. I try to keep the attitude that I would be doing it by myself whether she was here or not. That is just lying to myself though. There is no reason I should have to pick up after a grown woman. I bet you're wondering why I do it? I can't stand my house to look like crap and I hate arguing with her. She gets going and she'll start shrieking like a train whistle.
This pales in comparison to my #1 gripe. She is grandma, with everything that comes with that title. This includes a compulsion to spoil them. I have been having a few problems with the kids since BP went to jail, but they were few and far between. Now something has started I am nipping in the bud NOW!
The kids have learned how to manipulate, and I am not thrilled about it. They will ask me something whether it's ice cream, computer time, to go outside, whatever. Sometimes for whatever reason I will have to say no.
They will wait until I am otherwise engaged, usually while cleaning something upstairs, and run to Grandma. When asked the same question as I, her response is usually yes. I have spoken to her about it but she always claims to have "forgotten" or "they deserved it"
Every time something like that happens, I feel like I lose the respect of my children a little bit more! Am I wrong to be furious about this?
As always, thanks for listening and God bless!