Between her blithely assuming it was okay to bring her lover, putting his name on the card, and bringing her dogs uninvited, it sounds like SIL is completely self-centered. She seems to do as she wants while expecting everyone else to fall into place obediently, regardless of their needs.
OP, I'm very glad the party went smoothly, but at some point I suspect SIL is going to have to learn that reality is not always going to shape itself to suit her--or not without consequences.
You know, you're right - I do think SiL has, until now, lived a fairly charmed life. Being the youngest child, and the only girl, my ILs have spoiled her somewhat, and she's been able to get away with a lot. If she needed them, any one of DH's family would drop everything and drive halfway arcoss the state for her. BiL adored her, and would get the moon for her if she asked, and compromised a lot to make her happy.
She can be warm, generous, and funny, but also highly inappropriate. If the Karmic Bus hits her, it's not going to be pretty.
I was most annoyed about the dogs. I understand they're her fur babies, but we'd had no warning, my frail, elderly grandmother was there, and there were lots of very small children toddling around. It could have been disastrous. At least she kept them on leads and away from the kids for the duration of the party.
I want to clarify one thing:
...
Clearly the reality of cheating on two spouses and most likely breaking up a family with kids has not set in for SIL.
Friend was single prior to this, and his children live primarily with his ex. DH and I have hosted Friend and his children, so we do know them - actually, I was half expecting him to bring his youngest with him. The card was written in Friend's handwriting; the gifts from SiL and BiL placed on the table seperately (no card, so I can only assume SiL placed it there but given the nature of the gift, it had BiL all over it!)
...
SiL and Friend came together. They also gave a card, signed Friend, SiL and Friend's kids. (SiL had told me on Friday that she and BiL had bought something for DS months ago, so the card, I thought was a bit 
)
Did this card accompany the gift she and BIL had purchased together, or was the astonishingly inappropriately signed card the only "gift" they brought for your son?
The card-but-no-gift didn't really bother me, as I did stress in the invitations that nobody should feel obligated to bring a gift (slightly tacky, I know, but some of our friends are less well-off than we are and I did not want them to feel that they were invited as a gift-grab or that they had to spend money they may not have on DS.)
I'm glad that the party was drama-free, for your child's sake.
My fear is that SIL and Friend now think that you and your DH condone their infidelity. So I have a feeling that you two will now be expected to host them as a social unit.
I'm sorry, but I think there are all sorts of wrong to that.
Funny you should say that. While SiL and I were working on the cake last Friday (in which the atmosphere was slightly awkward and she was texting Friend whenever she had a hand free), Friend called in after work. It seemed to both DH and me that it was a test, to see how we would treat them as a social unit and in the one room. We rose to the challenge and were perfectly civil to both - as we would have done prior to this - and ignored any overt references to the festive elephant in the corner.
(I kind of want to buy SiL a small figurine of an elephant in a party hat, but I think it would be over her head. Maybe I'll buy one for me, anyway
)
What's hard for me is that I do genuinely like all the players in this drama individually. I want them all to be happy, but it's hard to reconcile that with how I feel about the situation.
