I sent SD a baby gift at birth since I felt  it was the right thing to do.  SD didn't acknowledge gift was delivered nor did she thank me.  

 I had a brief relapse at Christmas and sent baby a small but thoughtful gift.  Again, no acknowledgement.

I won't be doing it anyore.  The baby has no clue if I give a gift or not and SD is ungrateful.  Why bother?  

If you want to do something for the baby, maybe you can purchase a savings bond in their name so they will have it when they become an adult.  

Whatever else you are, you are NOT stupid, don't call yourself stupid.   If I were you I would be guarding my heart a bit more than you seem to be doing.  If I were not allowed to see the baby I sure as hell would not be putting efforts into making things.

People like your H's daughter perceive kindness as weakness. So she will exploit you as much as she can, and laugh about it behind your back.

It's also possible she resents the gifts and acts of kindness that come from you because she would prefer it was her father doing it.

In hindsight I realized that the fuss we made over the gskids caused further resentment in OSD because we had never fussed over her the way we did them. It also gave her a great deal of power over us, and she started using the gskids as a weapon. So please guard your heart, don't offer yourself up for abuse, and make sure it's your H who leads the interactions. Make no mistake, this woman does not like you, and it's only a matter of time before she snaps.

Especially stop giving gifts that you've put your heart into, as we do when we make things.

Sorry to say it, but with this type of recipient, your handmade offerings are likely running into mischief--ruined in the laundry, lost  at the mall, chewed to ribbons by the dog. To he!! with that "depriving the grandbabies" noise. She's the gatekeeper, and from what you've described she's determined to let nothing from you get through. The solution is to stop giving her or her kids anything, even when asked. You're always so very sorry but you just can't. I wouldn't let her know you're into the fabric stash, either. Again, given the type of person you have described, she is probably furious that you've put your filthy hands on family treasures.

Your impulses are generous, and it must be hard to realize there are people determined to reject and disrespect everything you do. But this girl will go out of her way to do just that, every time. I'd concentrate my efforts elsewhere.

You sound like a very kind and caring person who doesn't deserve the ostracism you have recieved from SD. As others have said, it may be best to refrain from making and sending gifts when they are clearly unappreciated. It surely is hurtful to you that your efforts are disregarded.

I hope your DH can see and acknowledge that you have tried, and has your back. It doesn't appear that SD will do anything other than take from you, which isn't healthy for your emotions. Continuing to do things to help her, while being rejected from the family fold won't make you feel better, probably the opposite. If SD wants things from you she needs to include you, if not she doesn't get your help. I hope things improve for you. 

You're not punishing a sweet innocent baby. Your SD simply does not want you in her life. 

I learned that lesson. No matter what I did for my OSD, it was not appreciated, and DH got all the credit. When she told DH that she did not need to thank me because everyone knows women buy the presents, and that I was not family, I obliged her by no longer trying to be part of her family. 

Focus on the people who want you there. Let DH take care of his own family.

Stop making things and start buying savings bonds as gifts for the GSkid.  Take a pic of the bond and send the pic in a card.  Do not physically transfer the bond until the GSkid is an adult and you can give it directly to the GSkid circumventing the SD.

Now stop being the SD's gift contractor.

Have some self respect and value yourself.  SD will not value you any more than you value yourself.

I agree with everything you say and I agree that she has not bern grateful.

I'm not playing devil's advocate but want to share my experience.  My mother was an expert seamstress and made all my clothes for years.  As a teenager. I wanted to be like my friends, have store-bought and also trendier clothes.  I babysat and did other work to earn the $ to buy them.  My mom still wanted to make things but I was able to channel it so she only made the things I wanted.  Over the years, she made things for me and the kids. Sometimes I liked them, often not.

Flash forward and she was living with my sister, a great crafter.  The two of them made all kinds of stuff.  I felt like such an ungrateful recipient but I'm a minimalist and just didn't like much of it.  I'm sure they thought "pearls before swine" but that's just me.  We all discussed it and realized we were just different.  Now that my sister had died and Mom is in long-term, I'm trying to figure out what to do with all the stuff they left.  One room is still piled with it.  My family members dont want it and theres a sentimental attachment.  Ill figure something out.

I'm just saying, some people don't like "things".  Ive observed that we give what we most value but thats not always what the recipient values.

I just have to ask this question because it's almost painful to read your post...

Why would you keep showering such heartfelt gifts on someone who has said such awful things about you and has essentially shunned you? I know you say it's for the baby, but the baby doesn't know if it's wearing rags or Dior, and you said yourself the kid has other clothes, so that kid doesn't need more clothes from you. So why would you let someone treat you so badly and keep coming back for more -- and with more gifts in hand, to boot?

What do you really want? -- because I know you don't want to give a heartfelt, homemade gift to SD and then be kicked in the butt by SD anyway. So what are you really trying to get by giving and giving to someone who clearly is not in a mindset to accept you?

good and decent person.

Why does a baby need a "themed" party of any type? THEY HAVE NO CLUE WHAT IS HAPPENING, so in opting out or refusing to make things (I'm glad you have agreed to stop doing this) you take care of YOU. If you are not making things  an innocent baby  does not suffer. If you are making things or decided to do so again,  YOU ARE CATERING TO THE VERY PERSON WHO IS THE PROBLEM, her mother!  And you suffer....

~S-T-O-P--I-T~

You will never change that which you refuse to confront. Have self dialogue inside your head and search for the truth behind what drives you do feel you need to be so generous to someone who obviously has placed you in a position which is beneath her.

I'm not sure how long you've been married, but I think I speak for most of us when I say in the beginning we all wanted to get along, and most of all to please DH. In an effort to do that, we bought things, remembered birthdays, and anything else we could do to facilitate being a "family." What I later realized is that I was never a part of their family, even though spouses are viewed as family Biblically. Dad always got the "thank yous" never me. So I'm telling you all this to say this, when we engage in certain behaviors, there is always (1.) A motive (mine was to please DH above pleasing myself) (2.) There is a pay off of some kind. By this I mean, I got to feel good because I was making the effort to make things wonderful so DH would be happy with me for being so accommodating. Once I realized how enmeshed they were, and he didn't have my back AT ALL, EVER, after SD went off like a feral banshee while he stood there and did nothing, my entire reality and focus shifted dramatically. Now I no longer drop everything I'm doing to run and help him, but rather, I let him know that when I AM AVAILABLE I will see if I can help. He lost his royal treatment when he made the decision to show me his holy hellion/urchin was in the catbird seat and made the clear decision to keep her there. 

You have gone all out, above and beyond and gotten nothing but exclusionary, behaviors from her, and you've been ostracized. Where is your DH in this entire picture? What's his take?

Take a step back, ask yourself "Why am I doing this?" I know you said to be "fair" to all the grandkids, but is doing that FAIR TO YOU?

This reminds me of the children's book, "The Giving Tree" (Shel Silverstein). The brief synopsis is, a boy wants and wants and the tree gives and gives (apples, wood to make a boat for the boy to sail away and be happy) until finally the once beautiful tree is reduced to a mere stump, or shell of its former self. The boy returns, a tired old man, to which the stump straightens itself up and tells him to sit. 

Another analogy is this quote, "In a country breakfast the chicken was only PARTIALLY committed, but the pig was FULLY committed." Be a chicken not a pig. Give and do what you are comfortable with, but I would refuse to do anything else, as the baby is not the benefactor of your thoughtfulness, but the SD is. 

If you want to put your talents and goodness to use, please do it through your church, or other volunteer/outreach programs. This will be far more cathartic than what you are/have been doing.

Hoping all goes well for you, as you are a kind hearted, thoughtful person.

“It just INFURIATES me that SD is totally ok TAKING things but yet states I am full of hate and she will not subject her nor her family to me.”

This is what narcissists, such as your SD, do:  Narcissistic personality disorder (NPD) is a personality disorder characterized by a long-term pattern of exaggerated feelings of self-importance, an excessive need for admiration, and a lack of empathy toward other people.

As such, I wouldn’t allow myself to get that upset over someone who will never be any different.  In order to change, you have to be willing to admit you have a problem and narcissists just won’t do that.  It is not in their nature.

If you want to give gifts to her children, that is perfectly fine, but keep in mind that they will, more than likely, model their mother’s attitude and behaviors.  So, if it is important to you to give to them as little ones (I went this route too, for a while), then do not expect anything from either SD or SGKs in return.  I know from someone older it is very difficult to believe that someone can just take and take without any kind of reciprocity, and then point the finger at you as being the odd-one out, but it seems that is the way our culture is going nowadays.  Some refer to it as an over-the-top, child-centric mentality.  To me it is just plain nuts, more-or-less raising feral children, but it is what it is.

So, if I do expect anything in return, and there is absolutely nothing wrong at all with a SM expecting reciprocity from her SKs or others, then I don’t give to those people any more that don't return the favor.  That way I’m never disappointed.  After all, usually if someone just keeps giving while the other person keeps taking that is considered some form of abuse.