Thanks guys! I will take the advice and just let her lead the way. I like the idea of reminding her of the postive things she's learnt as well! That's important and I hadnt' really thought of that!
Nickel, I agree, I am pretty upset by all of it, but i just can't find a way to approach the inlaws. I think if they ask her to go again to church (and last time they asked about 2 months ago, they said they won't give up) I will explain what has been going on. And you're spot on when you say their brains just can't comprehend what they're being told at that age (well what she was being told. She can't separate the devil from the boogy man in the dark, it's all the same to her and it's what's causing the problem). They DEFINITELY should've kept all the teachings to the children totally positive. I dont see what good can come out of these scare tactics.
As I said, growing up in a religious school, I just did not experience this, it's all new to me...
Thanks again guys xoxo