It's all a discussion that we can't really have because we don't know any of the facts.
If she was married and her husband died and she is low income, she should be able to collect social security.
They can sue you for not paying taxes in my home state, which might mean you need to sell the house to pay it, but maybe not.
She can't just give away her grand daughter. Your would be able to sign over parental rights, but not your son's so you can stop worrying about that aspect of it all!
There isn't much you can do from the UK. If she gets kicked out your dil will have to contact someone in her local area. There might be a wealth of resources that only local people would know. Churches, volunteer agencies.
But this seems like someone being annoying in time for the holidays.