I heard something said by a parent in AlAnon. "Your child will be an adolescent as long as you allow them to be one." She is 20 years old, and adult (albeit an immature one). She has the right to make her own decisions, even the bad ones. It's not your job to rescue her from herself. No consequences = No change. I admire you for holding your boundaries. If she wants clothes, gifts, etc she has to find a way to support herself. She doesn't seem to want them bad enough to complete the paperwork for assistance, so what does that tell you? Addicts are great manipulators.
I feel for your situation with the grandchild. Hard as it is, if he's not in real danger there's not alot you can do. I agree you could call Child Services and make them aware of your concerns.
Good luck....and keep posting.