First of all, realize that who you really resent is your partner. He is creating the monster that is SD.

he has literally said " if i make her cry or sad then i have failed".

He has this backwards. You have failed as a parent if you have never made your child cry or be sad. It's called being an actual parent and preparing them for the real world. It means saying, "No", and sometimes making them upset by making them do things that they don't want to do. And not letting them do things that they shouldn't.

If it made her sad that she couldn't swim in a swamp full of alligators, he would let her do it?

I hope that you do ALL of the parenting of your little one because he sucks as a parent. And a partner, for that matter.

You are about to give birth to the solution. When  your new baby cries, hand baby to daddy and ask him how it feels for him to be a failed parent.  Lather........... rinse.............. repeat.

If a crying child is proof of a failed parent, rub his nose in that crap until he catches a clue.  Baby cries, hand baby to daddy.

Ultimately the proof will be in the whiny abject failure that will be your SD, and the well adjusted successful happy adult that will be  your child.  That will likely be the final very sad lesson for your DH.  It will be too late for SD by then.

Congratulations on the baby.  Take of you, take care of your baby.  Do whatever it takes to protect  yourself and the new baby from both SD and your DH.

I completely agree with you and I would feel the same way as you do.  I feel the same about my skids.  We don't have any kids together but you are completed validated in your feelings about this.  He's going to see the issues he's caused especially as she gets older.  It's hard to disengage but when you do and he's stuck with his manipulative bratty kid he might open his eyes.  That kid is going to use him and abuse him for whatever she can get.  Stand your ground and keep venting here.  So many are in the same boat.  

The reality is that he's NOT being a great partner either.  He doesn't seem to care one bit how his daughter's behavior affects you, and he's putting her wants ahead of YOUR needs.  He never wants to make her cry or be sad, but he's fine if you cry and are sad?

This is common on here - people think they are good parents for "putting kids first" but in any healthy marriage, the adult relationship comes first. Yes, she may have needs that come before your wants, and your partner has responsibilities to her - but at this point, whatever she wants comes before anything you need or want, and that's backwards. 
 

Don't focus on how he can parent better, you can't control that. Focus on what you need to feel happy in your own home. There is overlap there, but the part that's important is that he needs to see how all of this affects YOU instead of always focusing on her and what she wants. 

I felt the same way with my SD, she was the same age as your when I had my first. Though she is a spoiled brat my DH is raising our kids very differently. At first I was worried he would be the same but it's different when a kid is with you full time and shared with you and not BM. It took a while but my DH admitted he didn't want to make the same mistakes with ours as he did with SD.

Have some talks about how you want to parent your kid. Don't bring up SD unless he does. Just have strategy talks and see how different his plans for yours are.

To an extent, it's difficult to blame a parent for not wanting to "waste" precious little time they have with their child on 'corrections and life lessons".  Nothing like going to dad's 4 days a month and having him spend the whole time trying to shove 30 days of parenting and learning into just 4 days.  Just like lots of parents have a hard time putting boundaries on kids that are in daycare all day.. they don't want to spend the little time they have with their kids fighting so to speak.

Sure,  I know that there still should be consequences and expectations of behavior.. but I can definitely see the pitfall there for not wanting to force everything.. because they want the child to have a positive visit with them.. the few days they get access.

But, on the flip side, it's unfair to let kids run completely rampant and ruin the environment for others in the home.. being destructive, disrespectful etc.. should not be permitted.  I get a bit of permissiveness... like letting the kid have their favorite meal.. but the kid shouldn't get to scrawl on the wall with sharpies!  

I think some amount of sympathy for the parent trying to build a relationship with their child in so few days a month (in person).. could give a little lattitude.. and in the end.. it is not the majority of days.. so perhaps figuring out how to disengage a bit would help there.  Insisting on some basic manners though.. that the kids are being decent human beings... not tearing down the house.. there does have to be some minimal standard that is acceptable.. 

And focus on bio. That skiddo is not yours, she has two parents and you are not one. Congrats on your impending bundle of joy.

Focus on your bio kid, and look for red flags and get ready for some new challenges. One big challenge that I notice in reading here is how the io parent favors the skid over the baby, as a way of "not making them feel left out or neglected". Its guilty parenting because due to visitation schedule they arent with the kids very often and the new baby has both bios 100% of the time.

However, its good that you are preparing yourself.

Here are some disengagment helpful tips:

- You CANNOT care more than the bio parents care for the skid. IF they dont care that skid doesnt brush teeth or is failing classes, you have to let it go.

- Skid should be taught how to do basic things, this is about life skills. Tell BD that you are thinking of skids best interests. You have limited control over things, but there is a minimum that must be maintained. 

- If skid becomes an all out lazy do nothing brat with an attitude, you will need to step up the disengagment - you do no cooking or cleaning for skid. No rides anywhere, no pickups drop offs, you pay nothing towards skid.

Good luck!