Sorry, I have a headache and am getting slightly confused today so will just answer all the questions you laid at the beginning of this thread.
What should I do? - Lay down the ground rules, he can't see sister in law without you.
Do you trust him? - I can't answer that and no one else here can. You have to go with what you feel.
Is the baby his? - No way of knowing without a paternity test. He may be able to legaly request one but I don't know so would suggest posing a question to that effect and hope someone with knowledge of law answers.
The fact that you hate her? - Well, don't blame you but you're going to have to accept her if you want to keep the husband blissfully ignorant and peace with your boyfriend.
Apologies if this sounds clinical, just trying to keep up!
Good luck, hope it works out.