As you are telling it, it doesn’t seem as if you are over-reacting. However, you are not being that direct with her either. If you care about her, you may want to sit down and matter-of-factly tell her that you are uncomfortable with the current situation and explain why. She appears to understand that you don’t like her interacting with her brother-in-law without her sister present, but she does not seem to mind the reaction it causes in you. She is triangulating. That is, she has created a triangle: you, him and her. She has (unconsciously or not) brought someone else into your relationship, and now there are three of you. People do this all the time: with another person, with work, with extracurricular activities. It’s gives them the illusion of safety and is a protective mechanism. If, after discussing the situation, nothing changes, then you have to decide how comfortable you are remaining in this relationship. This relationship should be about you and her, but it’s become about a third person. You deserve a relationship where someone is focused on the two of you, not on a third person.