Train. She is sick. Now she is emotionally abusing her son.
I do believe it is time to take the next step, go to CPS, you already said you are a 'foster parent' with them, and get the paperwork started to 'foster' him. Get them involved. There is no way, with her 'sickness' where it is, that she should have custody of her children.
I hope you have been documenting in a log book all the 'bizarre' things she has said and done, take that with you.
I know you care for these kids like you care for your own. J M H O, but I do believe it is time to take the next step to protect your step children.
Love and hugs,