My wife and I have been married for eight months, and my mother in law has been trouble from the beginning. In fact, several of my wife's family just like to gossip about everyone and not get down to the truth. I'm strange in that I actuall will confront someone, to their face, and get to the bottom of a situation. Not the in-laws! They will phone everyone and gossip without talking to the person in question.
Here is the current problem. My wife's sister and her husband (x and y) were over for a barbecue, as well as my wife's brother and his wife (a and b). Later on, I overhear my wife complaining to her sister (x) that b spends too much time talking to me, staring in my eyes (apparently) and flirting. Naturally, this was all unknown to me. I'm a sociable guy, but wouldn't dream of flirting with anyone, let alone an in-law.
When I asked my wife about this, she said that it started three months ago when her mom (who just plain dislikes b, for no real reason) brought it up. Apparently,ever since, my wife has been really jealous whenever b talks to me and doesnt want a and b over. [sorry this is a bit soap-like! But that's my in-laws...] now b's name is unmentionable, I have to avoid her like crazy so I don't 'lead her on' or 'enjoy the attention'.. It's just ridiculous.
There's no way b likes me more than anyone else. My wife is blowing this out of proportion and all because of her mother's gossiping.
I really want to confront my mother in law ( I already talked to x and she's totally on my side) and tell her to quit gossiping about the family because of the destructive potential (my wife and I had a rough arguement about this one). But I don't want to stir things up.
Should I phone up mother in law and let her have it, or let sleeping dogs lie? [pun intended]or just wait until the next time I see her?

This is driving me nuts. I think my blood pressure is high even as I type! :s