Quoting AmberlBurke:" Recently there has been some issues when it come to my son and people around my fiance ( not my fiances ... [snip!] ... anything about the smurfing ugly lil kid!" SO i am clealry pissed as u can see.. HOW WOULD YOU GUYS DEAL WITH THESE SITUATIONS??"
I wouldn't dignify her with a response, honestly. Arguing with her isn't going to do any good. It's just going to make you look immature. Ignore her, your MIL should ignore her, and when she runs her mouth around your son in front of you or your MIL, tell her it's not appropriate, and walk away.
As for the MIL's bf's grandmother, she's old... unless she puts her hands on your son again, leave her be. If she TOUCHES your son again, then have some words with her. The easier option would actually be to not let your son near the woman again, honestly...
Take the high road.