My advice: Offer to adopt her. But only after you’ve read the rest of my reply of points to consider, and feel it’s the correct step. Whatever decision you make it should be done in a manner that won’t cause a rift in family harmony. Peace in the home and family is one of the most important ideals of Judaism.
One of Judaism's basic tenets is to love another as you love yourself. You might ask, “Is this really possible? How can I love someone else as much as myself?” Our tradition explains it means that I should want the very best for the other person, just as I want for myself. This may include helping other people, even if it is not convenient, if the other person needs help and you can provide it. I think the litmus test is to ask yourself: “If the situation was reversed, wouldn't I appreciate my sister-in-law's help?”
I would also suggest making sure that there is no “family favorites” thinking that is a factor. Meaning, would it make a difference if she were your niece from your side of the family and not your husband’s? If the answer is “Yes” I suggest rethinking your decision.
And have you spoken to your husband about this? It is important that you agree on whatever solution you come up with, and this shouldn't become a source of strife between you.
And are gritting your teeth and hosting her with a forced smile, or saying no and risking family wrath your only options?
If you decide not to invite her – and not to adopt her – perhaps you can seek out other ways to have a positive relationship with her and be a positive influence in her life. Perhaps you can speak more often on the phone or email or text her on her birthdays and special occasions.
Obviously I don’t know you, her and the family dynamics to be able to answer these questions. But I bet you do, and that if you try, you can find a way to invite her into your heart even if you cannot manage to invite her into your home. And that may be even better. I wish you and your entire family much happiness and success.