TravelingFrog, I don't expect you to muster up any sympathy for what sounds like a massive beast of a FIL, but ... he sounds like he's depressed. And there's definitely some other sort of mental health issue (sociopath? paranoia? something's not right about his unwillingness to use public toilets, or buy anything to eat or drink while out) going on there. And it's a long-standing issue, given what you've said about your husband's childhood experience.
How does your FIL get food? Does he collect his own take-aways and ready meals, or does someone bring it to him?
At any rate, if you two do have kids, I hope your husband now agrees with you that your FIL will not be responsible for their care! I would never trust him with kids!