Am I understanding you correctly that there is no means of exit from the basement guest room other than up the stairs?

The window(s) is(are) too small for an adult to climb through?
In our city, this is illegal. If people are staying in the basement, there MUST be a means of egress other than the stairs. And this is a good law! This isn’t an idiotic “nanny law,” (e.g., sodas can be no larger than 15 oz.). This is a GOOD and SENSIBLE law that helps people!
If there were a fire in that house blocking the stairwell, you and your family would die a horrible death. It makes me shiver to think about.
I wouldn’t stay there. If my husband made a fuss, I would tell him, “Fine, you stay, I and the children are taking the car and driving to a hotel.” If he wouldn’t let you drive, I would bundle myself and the kids up warm and WALK to a hotel, and hopefully a kind truck driver would stop and give us a ride!
If you want to be mean, tell the local authorities that your MIL keeps guests in a basement with only one means of egress. They might go after her and put a stop to it. On second thought, that’s not being mean at all, it’s being kind! Do it!
I remember when Dr. Laura was on the radio in her prime. She used to talk about people who were merely annoying and frustrating, and people who were truly evil. The first group of people must be tolerated lovingly. The second group of people should be avoided at all costs. It sounds to me like these parents-in-law are teetering toward the truly evil side. Perhaps your husband should be encouraged to continue to visit them, but the rest of you should stay away. You won’t be missing anything. Send cards and letters/email, and make sure your children know who they are, and eventually, when your children are old enough to understand the dangers and know how to avoid these dangers, you could all visit them again.