Huge Mess! What to do?

[SoCal85]

Ok my first time posting on here, so I will try to make this as short as possible but will include the facts...

Sept 2004 met my S/O, he had daughter (1 y.o), I had son.( 2 y.o), no custody agreement was in place with his daughter, just c/s..we would pick her up from day care throughout week and weekends, we were residing in Tucson. Sept 2005 s/o had job offer in Tempe Az, so we moved and he made arrangements with B/M to see Daughter every weekend. Once we moved out there the B/M changed her phone number and he had no contact with Daughter until,
Jan 2006  My husband was contacted by CPS due to Daughter being in custody, because Tucson PD raided Moms house and found a number of hazards including knifes in childrens reach, meth pipes, meth, and filthy house.
His Daughtes B/M'S Mother(Grandma and Grandpa) lived directly across the street and knew what was going on..
B/M lied to everyone saying Dad was never around so we had to prove everything.. pictures, etc.We got placement March 2006. Sept 2006 he was awarded sole full physical and legal custody of Daughter. B/M had supervised visitation  for a few months. Her son was taken also, but her sister took custody of him because his father was in jail..

Here 's where it gets messy...
My s/o Mother moved in with us May 2008, and s/o and his Mother had arguement. His Mother moved out and contacted his B/M and told her I was abusing his Daughter.Saying I was giving her coedine cough syrup to make her sleep all day.. His Mother was also trying to black mail us through email which I have, she wanted her rent money that she put into the house. S/O Mother wrote a letter to the judge which awarded him custody telling her how evil I am.
CPS was involved, and came to the house and immediately closed the case. Since then him and his Mother are on good terms, and she wrote a letter to the judge stating " she was not in the right mind" at the time of her writing the letter, and contacting BM.
Nothing was ever mentioned after that and B/M would always tell me how sorry she was that she believed that and his Mother was  a nut!
Jan 2009, B/M told us she would possibly be moving to NY with her current boyfriend, and wanted to if they could agree on visitation. S/O agreed. March 2009 they decided not to move.
July 2009 the house we were renting was being foreclosed on, and we had to move out before our lease date was up, also S/O job was really slow. His job said they could have him work in the mines 3 weeks a month, but he would be away from us, or he would have to find another job. S/O was offered a job in CA. S/O told B/M of us moving In beginning of August 2009. They agreed on it, but had nothing in writing.Sept 2 Daughter was disenrolled out of school, and S/O let her be with Mom in Tucson b/c she was getting married to her b/f of a year. Daughter was down there for a week, and we made plans of meeting them in Blythe. My sons Grandparents offered to have them just drive to Phoenix, and they would bring our kids to Blythe so they did not have to make the drive. Sept 23 we were served with court documents. B/M claimed she had no idea we were moving, and all the typical lies. She also asked for emergency motion for placement without notice which was denied. Oct 30, I went to pick the kids up from school and daughter was not there. B/M had come and taken daughter from school in CA, and took her back to AZ. We notified Police in CA,we called Police in Az, they said bring custody papers and we could get her back. We made a report, cop informed us possession is 9/10 of the law in az and even though we had court order he could not force B/M to give Daughter back. Cop went to door came back and said B/M would not give her back because of molestation and brought up the codeine cough syrup which was a year before and case was closed. According to cop she made report on Saturday stating  my son 7 yo was molesting her. Since then B/M stated Daughter is in counseling for abuse from me and my son. My son is very upset over the whole deal, and has affected him greatly. Althought not biological, the two kids were very close. Daughter stayed out in az til court date on  nov 13, her lawyer asked if s/o was willing to do mediation,  he agreed.  S/O also agreed to give temp placement because B/M had already enrolled Daughter in a new school, and he did not want to pull her back out immediately.Judge ordered liberal phone contact with daughter, which anytime we called B/M stated "she does not want to talk to you". Mediation was Dec 11, B/M told S/O she did not want to agree on anything and wants the judge to decide. B/M said " I don't agree who your with, so I don't want to agree to anything." S/O asked "If I was single would it still be an issue of me seeing our daughter, She said I don't want to talk about it" S/O stated she was apparently under the influence of something because of slurring, cross eyed.. etc. Dec 20 S/O and I picked up Daughter and she stayed with us for a week for xmas..( Now if I really thought someone was abusing my kid, no way I would let them go) While with us Daughter complained of different people being at the house sleeping over, a "mean uncle" that is always drunk and is staying there, B/M sleeping alot ,and B/M and S/D going out for bike night and her being watched by her uncle.. B/M also works nights.So S.D OR S/S watches her at night.. Daughter complained about walking to the bus stop by herself with her 8 y.o brother, does not have her own room, and she has to sleep in bed with her step sister..  I looked on myspace and found her S/D and step sister (14 y.o) myspace page.. S/D has poems with B/M name in it talking about her running off with other men, another one about a physical fight they had.. Step sister has nasty pictures and status and moods and there talking  about doing things with boys etc etc and also notes she is bi on there. Anyways Daughter went back, we got notice custody hearing was granted and S/O is going to Resoultion Management Conference on Jan 22. We don't have money for a  lawyer d/t moving and he has no idea what to do..B/M has lawyer.. How can she even have a chance with the whole cps thing on record not even 4 years ago for drugs, child abuse and neglect! Plus her history of Meth and drug abuse...  She also had a psych eval done which stated she has a dependency on men that are harmful to her and her children and stated she has no emotional connection with her kids, and views it only as her right as a parent (FYI. Daughter already witnessed S/D throwing B/M onto table). Any advice... Sorry so long.