And she is rude to everyone. She can take care of all her daily needs and even has a caregiver come in twice a week who does really nothing but talk to her and play with the dog. But she does not want to help out in any way just wants to lay on the couch and eat. Also is very rude like when you are sleeping does things to wake you up and goes through my personal things.
You speak of her "moving in with us" which means you have a husband and possibly children.
Did she live in her own house when her husband was alive? Did she inherit much from him?
How old is your mom? Has she ever worked outside of the home?
My step-brother's mom moved in with him, his wife, and 3 children several years ago because she just could not live alone after the death of her husband. Other than that, there is no reason for her to be there. It is like she is still stuck in her grief which is not healthy. My step-brother and his wife both work. The children are in college. He is also coordinating care of his father, my step-dad, from another nearby town. His dad is 89 and in a wheelchair with some paralysis following a recent stroke. My step-dad also has dementia which is getting worse and worse, but is not as bad as my dad's dementia and he is also 89. He has a caregiver for 5 hours a day, wears a life alert and that's all. His mother in law is healthy.
If you have the discussion about rules and they are ignored, then it's time to find her alternate living arrangements.
You need to do this sooner rather than later. The sooner she gets situated in a new place the more easily she'll adjust.