It sounds like a little bit of a turf war. Did you two have issues over your husband's attention before your daughter came along?
To be honest, I think I can understand how she acted about the corvette. Not that you should let your daughter in it if it isn't safe! I wonder if she was just really excited about the gift and felt that she was getting rejected along with the gift. She probably doesn't want to admit to herself that she gave her granddaughter something that harmful, esp. if your granddaughter is uncomfortable around her. She went to a lot of trouble to win her affection, and it turned out to be a completely inappropirate gesture, which probably made her feel more foolish and unwelcome.
I'm just guessing, and I'm not really sure how to solve the problem. Is your MIL lonely?
I always believe in positive reinforcement. Reward the positive behavior, extinguish the bad behavior, generally by not responding to it. Catch the animal doing something right.
