As TDC indicated, if your MIL isn't part of your reservation and DP you are not permitted to use those credits to buy her a meal. That is a standard part of the DP, it doesn't matter if its QS, Basic or the Deluxe version of the plan.
As for distinguishing child vs adult CS credits you are indeed supposed to purchase child meals for children. However, there are some CS places that do no offer any child meals so adults and children order off the same menu. Check the sticky at the top of this thread..."Everything you want to know". I think there is a partial list of places that only offer an adult menu.