Do not let your heart cause trouble in your life.

Take care of you. The extended IL clan baggage is not your problem.

Good choice! This situation reeks of years of drama. 

Clove, you have a really good heart but you have to heed that line between watching out for others, and watching out for yourself.

There is always a cost to having another person live with you. It's why my DH and I agreed when we moved in together, that no other adult live with us. It's hard on a relationship, and it usually involves some enabling, which is never good for anybody.

There are exceptions, but most of the cases I know of, these situations just end in regret and resentment. This is not someone who, through no fault of her own, has fallen on hard times. She has made bad choices, has no work ethic, but plenty of excuses, and doesn't want to be held accountable. There's really nothing you can do for her, she has to do it for herself.

But please do stop and do not let her move in, and stop supporting her.  She needs a FIRM deadline to find a different housing situation.  This will not end well - it will end with resentment on all sides.  Please don't enable her, no matter how sweet she may be.  The kind thing is to encourage her to be independent and work for her living.  Really it is the kind thing in the long run.