Oh dear.
I am sorry if I appear critical of DS here, but he is actually perpetuating the problem by refusing to be open with you.
He knows why his wife is unhappy, and knows that YOU know she is unhappy, but appears to push you together when this is clearly not working.
Without being mean, this sounds like a recipe for a rubbish Christmas for everyone.
DS should have the kindness to everyone involved to be honest about what the problem is. Acting like nothing is wrong is only going to make things worse.
Would it not be better to stay in a rented place than in the home of someone who clearly - for reasons DS refuses to disclose - does not want you there? The granddaughters will pick up that mummy is unhappy about your visit.
Was the money for the improvements given under the condition that you would stay regularly in the home, or was this something that only came to light later? What expectations did you have when you discussed the gift of the money with DS and was DIL aware of this?
I do not wish to project at all here, but my DH has accepted gifts of money from my MIL that came with particular expectations, not told me about either the source of the money or her expectations, and it has never failed to cause trouble all round.
I think before you embark on a potentially very difficult visit, DS owes you an explanation of what the issue is so that you can consider how to solve it.