My heart breaks for you.
I think you were fine to set boundaries. My brother and SIL had their grandson and wife as tenants in their in-law apartment. Perfectly lovely kids, zero problems - and still set a time limit on their stay.
No one is required to subsidize another's drug use. At one point, there was talk of my step-daughter o=moving to this part of the country and staying near us for a fresh start. I told AH she simply was not going to stay with us: for one thing, AH and step-daughter egged each other on in drinking contests. For another, she didn't appear serious in making life changes. Example: she wanted a car so she could get a job. When she was in New England for a visit, AH offered to take her out AND BUY HER A CAR. She said, "But if I go out for a whole afternoon, who'll let my dogs in and out?"
She has successfully manipulated her mother and step-dad (and now an ex-husband) to subsidize her living for the last 20 years.