Hedgehog Mom - you are dealing with a very sick passive-hostile bully. There's no two ways about it. She may have
borderline personality disorder, or she may just be filled with self-hatred. I have one of those in my life, and I had a run in with a psycho-southern-belle at one point that was very similar to the family member's behavior.
You are definitely walking a fine line here. If you get too agitated at her behavior, it only feeds the behavior. She is getting the adrenaline kick she seeks by watching you seethe. These gifts aren't "poor choices," they are "strategic choices." This is her MO. I would bet that this behavior didn't start with getting you and your husband kicked out of the house. She probably antagonized you as a child to get you to hit her, and then when you did, you are the one who got into trouble.
There is a solution, and it does start with you. First, see a therapist. If you can, find one who does something called
'Neuro-Emotional-Technique." That's a method for disconnecting past emotions so you can deal with issues in the present. You can also meet with a therapist to work through and discover all the early beginnings of this behavior towards you.
Your goal needs to be
~A. To not react at all to her bad gifts and behavior
~B. To wait a few beats before simply saying, "Sis, you know that these are inappropriate gifts. This is not in the spirit of our gathering. Here. You can do with them what you will. We won't be accepting these or your unkind behavior from here on out. If you choose to behave like a professional adult, that's fine. Otherwise, leave us off your list."
Then you walk away. No histrionics. No trying to get others in the family to see what you see. No "juice" for her to grab onto and then make a scene. Calm. Composed.
If she pushes, and if you've done your homework as I suggested, you might try what I finally did after being able to speak in a detached way about her bullying behavior, I responded to her snarky comments by saying, "I love you, and I'm not sure why you are acting so unkindly to others. I do hope you seek counseling. It would be best for all concerned."
Because her attacks on me were very public, and because the entire family saw me respond in an adult and calm fashion - EVERYTHING she did after that was suspect and under the microscope. People were saying to her, "Yeah! Why ARE you so mean? She has only been loving to you! What's up with that?"
Believe me - it took many NET sessions and much prayer to get to the place where I could take a deep breath and speak my truth from my heart. It turned the tide. And, even though it didn't "fix" her, it shortened her visits to our home and she kept her distance from me. Bullies don't like people who don't react.
One last thing - watch ALL bullies. There's something weird I realized when I watched the Hobbit movies. They are like golems who feed on anger, hate and fear. If there is none of that around, they will drum some up so they can eat. When you don't respond with anger, fear, frustration or hate, they will go somewhere else to find their "food." Yes - this becomes someone else's problem. But perhaps they serve a purpose in the world: Think of bullies as teachers who help you learn how to channel and use your emotions rather than having them run your life.
And thank you for sharing your story. You are not alone. We have all run into these people. They are not well. Don't make yourself a mental case trying to figure them out. The world really does have people who do not think like you: they are not rational, don't have "your best interests at heart," and don't really care if their actions create a problem for you. This is why we have laws, police, therapists, prisons, and we (in most states) have the right to defend ourselves and protect our loved ones. Remember, Charlie Manson had brothers and sisters. So did Jeffrey Dahmer. So did many of the wackadoodles out there. Imagine THEIR early Christmas parties!!!