And bullying her, your husbands response of she's a sod isn't good enough. He addresses this immediately because your daughter is entitled to a safe environment where she isn't harmed or bullied by his daughter because he refuses to parent her.

if it were anyone else bullying and harming your child would you let it ride? protect your child. if your husband won't help you then you have two serious issues to deal with.

I would talk to your daughter.. what you are seeing may or may not be totally one sided.. she may feel it is more "playing".. and not be taking it the way you think.. and some people do joke in odd ways.. 

But.. on the face of it.. it seems like his daughter is not being particularly kind to your child and as her father.. he should be pretty concerned.  Just recently there have been a few publicized cases of kids bullying and harming a peer.. and at a point it gets to be beyond "kids will be kids" and not get along all the time.. and cross over into something more dangerous and dark.

He should be worried that his daughter perpetrates this with people that may not take such a light view of it.. and needs to deal with it.. 

on the face of it.. it seems that your daughter is not the actual bad influence here.. but i would be sure that this isn't a more reciprocal thing with them before I blew things up totally.. to make sure your daughter isn't more participating in this than it appears. 

(because what is on those videos could only be half of the story.. so you owe it to both girls to understand that)

I'd talk to your daughter to get a better idea of what's going on and if she is bothered by it.  Has your daughter seen the videos?  Does she know the SD refers to her as a cow?  Is SD belittling or making fun of your daughter in front of other kids (with or without your D's knowledge)?  If DD knows about what SD is doing and is OK with it because she gives as good as she gets, I'd drop it and let them work out their own relationship.  If DD doesn't know about it, or knows about it and doesn't like it but is going along out of some desire to be liked by SD, then I'd get involved.  I would also get involved to stop the physical stuff - no hitting, pushing, pinching, etc. should be permitted.

Once you have the lay of the land from your daughter, I think you bring it up with fiance again.  If he brushes it off again, then it might be time for him to be an ex-fiance.  It's not fair to your daughter for her to have to live in a home with someone who is mistreating her where the adults do not put a quick stop to it.
 

Your daughter is stonewalling SD. She may be biding her time. How would your husband take it if/when your DD ups and decks the nasty piece of work that is his daughter?

 bullies need their asses kicked, severly, by their victims.  Blood, solves the bully problem.

I was an easy going mellow kid. I was decent looking, made decent grades, was a decent athelete, and I changed schools regularly due to my parents careers.  That made me a target for bullies.  

I hated fighting, it frightened me. Until l came to the conclusion that getting hit hurts whether I am fighting  back or not so the bully/hitter was going to experience pain far in excess of what they inflicted on me.

After that, there was no more than one bully incident at any new school.

I never once got in trouble at school, with the law, or with my parents for ending a bully's targetting of me.  Yes, I was called to the Principal's office, though never with the bully at the same time as the bully was usually on their way to a doctor. Overwhelming violence and pain sends a message to the bully and any other bullies

Your SD is targeting your daughter. Coach your daughter to break SD's nose, bust lips, and/or deliver severe bruises. It will only take one beating by DD of SD and this will end.  Save the phone files that SD has collected.

That way when BM freaks out, her precious bully daughter's ass will be bared and BM can explain in court why her dauther is both a bully and a cry baby.

IMHO of course.

It is really frustrating.  My wife will never discipline her kid in any way for anything ever... and so it will never stop

So - definitely talk with your daughter to get the "bigger picture".

When I came into thepicture, SD24 Feral Forger was 15 and change, SD16 Power Sulk was 8. FF would punch and smack and call PS "ugly and stupid". I was triggered by it and would stand up for PS. PS did not reciprocate but bided her time, until a  little over a year ago, PS was 15, and FF 22 ishy. FF had been in and out of the Toxic Trolls BM apartment, had been having horrible fights, was disgusting and rude in general. Her normal thing.

WELL one day, FF kicked PS in the stomach, PS picked up a shoe and pounded her thumb. She went to ER, and they are mandatory reporters, so CPS was called and PS was required to go to a "therapist", and this "therapist" was convinced that PS was violent and really hounded her on it.

SD16 is almost 17, and she is generally kind and considerate, but if you push her too hard she WILL and DOES push back. Ask me how I know. But shes not prone (like her mother) towards violence. SO.

Your child is being bullied, and for the sake of argument might be giving as good as she gets. Find out. Then take the needed steps to figure out what to do. Nanny cams might also help things.