MIL drama. Am I wrong?

Maybe let her stay for a month or 2 and (if she's old enough) get her a job so she can support herself and find an apartment for her and maybe y'all pay for the down payment (if possible) and she pays for everything else involved. I'd be firm with your husband about your boundaries and tell him straight up it's not his responsibility to care for his mother, that switched when y'all got married and unfortunately with her reputation she doesn't deserve princess treatment in a house that's not hers. Maybe I'm heartless but I don't believe in letting someone stay in your safe space, esp if they're just going to bring negativity and disrupt peace. I can understand being cordial long enough to get her acquainted with the city and a job or figure out how she can support herself then move on and if she disrespects, challenges or doesn't listen/be proactive to accomplish those goals then you and your husband need to have a long and hard discussion because I wouldn't be able to do that esp long term.

Ope, then rediscuss with your husband because if you're not joining the family temporarily and be PART of the family and only want a weird fixation from your son then you don't need to be here, that's just my pov tho.

Sounds like reputation enough reason to have a hard no, especially if she has a job already!
if you’re going to allow it I would do a roomie agreement style contract with expectations , strict timeline and boundaries clearly set beforehand.l so it doesn’t have to much a negative impact. Also I’d talk with your hubby about non negotiable and house etiquette that’d be required so he can help mitigate and balance things. Communication has to be central for any kind of long term stay