Can my sister in law stop my mother in law from selling her house?

No! Unless she has her power of attorney.

Does SIL want to sell the house b/c you're living in it with your MIL?

You and your husband live with MIL, and yet she has given POA to a daughter? How did that come about?

What does MIL want in this situation? To sell the house? Unless MIL has been declared by a court to be incompetent, the POA should help her do what she wants to do with her finances.

My SIL is POA and says my mother in law is not capable of making any decisions? But she seems sane and capable to me? But is a little forgetful? But I should know my husband and I live with her not my SIL!

Is the SIL a guardian? Does she have financial POA? What is MIL's mental health status? We'll need a few more details.