I'm not a lawyer or an expert, i'm just helping you according to my experience filling this form and I even if I'm being honest and I'm trying to help you, I might be wrong, so act accordingly
Your wife has to fill I-864, even if she doesn't make enough money, and also,if your mother in law is going to be a joint sponsor, she has to fill I-864. Now, if she is living with you and your wife, she can fill I-864A as a household member, if only if she is living with you, otherwise she must fill I-864. I recommend you to read the i-864 instruction as many times as you can. I did that and every time I undertood that form better (In my case, this form was the most difficult to understand). Now, it doesn't matter if she is working or not. She only has to meet the 125% of the current Federal poverty guideline. How can you know if she meets the requierments, you just have to ask her for her tax 1040 forms of the last three years (2007, 06 and 05). There is a line which says
Total income or gross income. That number has to be over the 125%. Now, if she doesn't have the tax returns (1040), she has to fill a form 4506-t to ask for the tax info of last three years. it takes 30 days to get that info and is for free. Now, if you are in a hurry, you can request via
http://www.credittechnologies.com/Tax_Verification_4506.asp your tax info, they will give you the info en less than 72 hours but it cost money. Now, if her husband died, I guess you can use her husband taxes as long as she appears as a dependent (I guess, i'm not sure about this part).
Also, remember you have to send copies not only of the tax returns (1040), you also have to have forms w-2, and 1099. It is only necessary to send 1040, 1099 and w2 from the last years, but you must fill the information of the last three years, so you have to know the info of her tax returns of 2006 and 05.
Please remember that I'm not a lawyer or an expert, i'm just helping you according to my experience filling this form and I even if I'm being honest and I'm trying to help you, I might be wrong, so act accordingly