Wow, I'm incredibly sorry to hear this is how she handled the error of releasing her. I know you know that she cannot possibly care for her baby, not in this frame of mind, this far into addiction and so resistant to programs and treatment and real change. I want to hug her but I also want to smack her upside her foolish pretty head. Instead I'll send you hugs, far more productive.
Hang in there. Obviously you and husband have a lot to talk about. Taking a newborn and starting all over is a huge adjustment and sacrifice. It's more than loving a grandchild, I know you know that. I would be so torn in your shoes between taking it on, versus letting the baby go somewhere else. Please just be very aware that meth addicted or not, the odds of her being absolutely forever out of this babies life if he ends up with you, are slim to none. Courts tend to give chance after chance, even if its just supervised access. Not to mention, she's your daughter and going to turn up and thats a whole other ball of wax. I don't honestly know what I would do, but as heart breaking as it would feel, I think I'd lean personally toward allowing placement hoping either difficult child smartens the heck up to be a mother, or the baby finding loving adoptive parents that won't have to have difficult child pop up, addictions and all, and impact that beautiful babies life negatively. I say that however from the safe corner I sit in, not at all facing this scenario so who knows what I'd do if it actually did happen with one of my children. I know you though, and I do think that whatever you and husband decide is right (for this baby and also for you and husband) you will cope and handle and manage either scenario. Sending strength as you two work out what you are prepared to handle and what your line is in the sand. I'm so incredibly sorry I can't even express it. I do want to share though, that as hard as it is to let your child flail, I think it's high time she does flail and have to pick her path and road on her own. Navigate it herself. I think for me, in your shoes, that would be it. Phone cut off, she can find a way to get her own later. No money, jail visits, intervening with agencies on her behalf, letters, nothing. As in, nothing until she is clean for at least six months in a proper program that tests and she can't con. Harsh? Probably. Does she need it at this stage? Absolutely. It's time for her to find her own parachute or crash down under her own steam. I really believe at this point, you need to try to toughen your heart for a long period of time towards the mess she created, focus on your own life and future and needs, and potentially a little innocent baby as well. Many many hugs.