no mess

This message has been edited. Last edited by: gatoradenz,

Ok Im lost.
What nationality are you and what nationality is your husband.
What visa did you enter on and when did it expire.
What visa is your husband on.

what is wrong with your husband filing for AOS as a sponsor?

He is a full time student and works part time, therefore he doesnt met the salary requirements to sponsor me himself.

This is no excuse not to file ur papers. He can find a co sponser to sign the affadavit of support. Ask him to do it soon.

What dangerous road is he driving through twice a week?
Is he driving Formula-I, doing 380mph/hr on country-side road?

As per your question: you have legal custody of your child, only your husband can contest it, unless you are deprived of parental rights due to drug abuse/certain crimes and etc.

Ok.
Find someone else to act as sponser for you. Anyone can do it. All they have to do is show on paper that they are prepared to sponser you and your child. There is a fee waiver also for those that can not afford the fees.
http://uscis.gov/graphics/publicaffairs/factsheets/waiverfs.htm

As for getting a passport for your daughter that is easily done. The grandmother has no rights as relates to the child. By the time you get an appointment for adjustment...more than likely a year will have passed so you probably will not even have conditions on your green card.
Good Luck

No problem.
Some additiomal advise. Do not tell the mother in law anything. Act as if you still need her help etc. Let her think that that you accept that she wants visitation rights etc. Just let her beleive that she has the upper hand and in the meanwhile.. Do what you have to do THIS WEEK. Do not waste time because marriage to a USC is meaningless if you arent adjusted or pending adjustment. If you came in on a Visa Waiver then you have no rights to argue your case and you will be instantly deported. Im not trying to scare you but encourage you to get it done now!
Good Luck