ack, thats a huge issue! HUGGGS!!!
I dont know how you normaly handle your MIL, if I were in your shoes, I'd tell her that you and your husband would like to get to know this sister and that you will spend time with her. If that means holidays with both the new SIL and MIL in the same house, then so be it. But I'm bull headed too (actually ram headed, I'm an Aries

) A softer way of the same approach is just not having them together, but letting MIL know you will have contact and meetings etc with SIL.
I think your MIL is trying to protect herself, for 54 years she has had that weight of giving a child up for adoption, and she may think meeting her now may bring back bad memories or open the thoughts of 'what if I didnt?"
And even though the paperwork says boyfriend, she still could have been raped, either by someone else, or the boyfriend. She may have had to take years to come to the realization that the bf raped her. especialy back then, date rape wasnt "rape".
another option is if the new sister understands her mom being scared to meet her (and thats probably exactly what it is) maybe you can have them meet each other under the guize of the sil being a new friend. Let your mil learn that she had a good life etc. THEN let her know, gently, that she's her daughter.
I know I am not much help, but thats what I see from your post. good luck!!
Vicky(33), married 10 years, no children. Fought (and lost) infertility for all 10 years. Moving on to adoption, hoping to be able to do it via foster system.