“. I can’t understand his family treating him with such deference and respect, obliging his every demand, never imposing boundaries (although my husband does push back when he makes racist statements).”
Right, I see this too. My grandfather’s behavior was not as overtly rude/bad/scary as your FIL’s, but he was sexist and racist and a dick, and the family treated him as you describe above and still will not acknowledge that he was an asshole. He could not be questioned or challenged, and that’s how it was. His son, my mom’s baby brother, has similar tendencies and also is treated with kid gloves. You have to understand that this is a product of intergenerational trauma and abuse. My grandfather (born in 1911) witnessed a lynching as a child. Once his mother served him something with fish in it instead of oatmeal, by mistake, and he just had to sit and eat it, he couldn’t question her. Your FIL was probably raised by people who abused him the way he’s now abusing others. It’s not an excuse but it’s hard to break that cycle.