Oh the poor man, she does sound unhinged. I think she needs some medical treatment. At least you know she has a husband who is there with her and will not let her come to any harm. It’s very controlling behaviour and manipulative too. Can your fiancé speak to him about her behaviour and get her into counselling?
My father used to threaten to kill himself after he kicked me and my mother out of our home. He then realised after nine months that life was not as rosy as he thought it would be. He wanted us back, but we stuck it out in a cold one bedroomed flat, it was grim but better than going back to him. He was controlling and manipulative and very cruel. Your fiancé would be better off cooling his relationship with her. Tell her he will ring once a week at a set time and stick to it, he would feel better to take control of the situation. She has her husband, she should let her children live their own lives now x