So she's taking another hostage, eh? Well, for her husband's sake, it's probably a good thing. It's unfortunate your parents (and, presumably, her children) have to suffer through all this drama, though.
So far as your parents go, you may have to work more on detaching from THEM than you do the sister. They are really the ones you'd like to "save" here. Maybe you could talk to your mom about some of what you're learning about detachment. Does your mom live nearby? Maybe you could bring her along to some Al-Anon meetings. She probably qualifies by virtue of the RAH. It's a skill that would benefit her greatly, it seems.