Read rule #1 "You are not here to take shit." Go kick some ass, sister!

If you need any help writing a "riot act" speech let me know, I've had to dish them out a time or two and they are second nature to me at this point.
I'm going to have to try being confrontational if she starts any BS... it's not my nature, but apparently what I'm doing isn't working. One thing that is interesting to me is that she does most of this drama behind my back. When I'm around her, she's really weird and quiet and just stares at me. Then usually leaves a little while later b/c "she can't handle seeing us together." (That's something we find out later from the SIL.) But man does she talk shit to everyone else.
Another example: My bf and I were picking up the dogs recently and I was waiting in the car. When they came down the stairs, she was crying (trying to get sympathy from my bf about how the dogs no longer remember her)... well, as soon as she saw me, she dropped the stuff she was carrying and said, "I can't handle this." and ran back to her house. Apparently she didn't think I was there.

My bf just laughed it off and didn't even think twice about it.
I don't get the boyfriend? I mean where are his balls? Where are his brains?
Where is his own self-respect?
What about the girlfriend? Sounds like it's been a long time. Has she talked with and/or confronted him about how she feels? Or is she afraid to?
The way I see it...the problem isn't with the ex- it's not with the sister, it's not with the family. It's with the boyfriend.
Let's look at this in the proper perspective. You should have no problems ditching this guy (no matter how wonderful he 'seems') for the very reason sLiPpY mentioned. The boyfriend clearly has no stones. Why hasn't he stepped up to the plate and put an end to the madness? After all, this is his ex! Ugh, run and don't look back!
We have discussed this a few times and I'm clear about how I feel regarding her bullshit. He told me when we got together that he knew b/c of the relationship his ex has with some of his family that she would be around for a while, so he learned to accept that and try to just get along. And quite honestly, he's oblivious to the "madness" b/c he just doesn't care. All he wants to do is keep the peace and I honestly don't think he sees how it annoys the shit out of me sometimes... typical intj.
And for the record, it's not just her that walks all over him... his whole family does. I've talked to him about it, but he won't budge on the issue. Him being the go-to guy is part of why i love him, but he doesn't realize that it causes more problems in the long run. He's a big boy... he'll figure it out on his own.
I hate drama so this is really stupid to me, but I'd leave if I felt threatened... and I don't.