And, what does her mother say about all this?

Some days her mother seems fed up and is committed to making a change, but others she just seems passive and feels hopeless and lost as to what to do to motivate her daughter. And even other days she's "buddy buddy" with her. My wife came from a very rough childhood and essentially both her biological parents neglected/abandoned her. She was dealt a terrible hand. And I believe she still has trouble to this day knowing how to parent a child due to that. In many ways, she has overcompensated for her lack of love and affection in her childhood by being way too lenient on her daughter and not setting any boundaries/expectations or consequences for poor behavior either. And I've always been in an awkward spot as the stepfather, obviously. But I know I'm also responsible for not stepping up and establishing rules, etc come hell or high water. I just have so much resentment though for my stepdaughter and the fact that she at the very least, should have a conscience or basic respect for those that provide her with all her essential needs. But shows no gratitude at all. She's the most self-centered person I've ever met and I literally can't even look at or speak to her anymore its so bad. Just another small example of her selfishness and inconsiderate nature...my Dad, and basically the only "grandfather figure" (if you will) she has, just spent a week in the hospital after having a heart attack that almost killed him and then had open heart surgery. But did she ever once visit, or express interest, in going to visit him at the hospital which is right up the road? Of course not! Although the rest of us went multiple times and he asked about her several times. I'm literally going to go nuts if the situation doesn't change...and soon. I want a major change, even if that means kicking her out, for the sake of the rest of us.

"My wife came from a very rough childhood and essentially both her biological parents neglected/abandoned her. She was dealt a terrible hand. And I believe she still has trouble to this day knowing how to parent a child due to that."

It seems you have no problem making excuses for your wife's poor parenting. Maybe that's what your wife does with your step daughter.

"I know I'm also responsible for not stepping up and establishing rules, etc come hell or high water." No, your WIFE is responsible for not stepping up and parenting her daughter.

Your SD is 21 years old, it's too late now to try and do anything, she's set in her ways. Only thing you can do now is give her a time limit to move out. There's no reason for her to still be at home.

I only read the first part of your post... until you said that you are sure you are partially responsible for not being tough enough or blah blah blah.

No, her mother is responsible for all of it. She's 21. She can leave. I have three adult children. My youngest is 22. She got along great with my ex but my boys gave nothing but grief. It was MY job to escort them out so they can grow the heck up & take responsibility for themselves. I love my kids & want the best for them but sometimes giving them everything means they never have to do for themselves. Your wife is doing her daughter a huge disservice and I'm sure it's affecting her marriage. She can have that close mother daughter best friends relationship when her daughter when her daughter is mature enough to be on a level playing field with her mother... unless her mother is choosing to go down to her daughter's immature level.

My rules for my adult kids were simple. If you're not in school, you'll work full time. If you are in school, you work part time. A weekly contribution of $50 is mandatory because it teaches that they are contributing for their own way, even if it's just a little. (if you don't need the money... it can be saved in an emergency fund for a later event when the kid wants to "borrow" some money... because that WILL happen) and they were expected to clean up after themselves. It won't matter to me how old they are, if they ever move back.. same rules apply. Those are the only conditions for living in my home.

I really feel for you and Im reading my step daughters future as I was reading your post. You have to start voicing your opinon right in front of her and make her feel uncomfortable in your home. I have started doing it and it has bad results sometimes but I refused to let my 11 yr old step daughter rule our home. Finally things are starting to change but its very little cuz her dad is tired of hearing me b@$ch about her behavior and I now 21 but she acts like my SD as far as her attitude and its really beyond me how ppl raise thier kids to be inconsiderate jerks. I know my advice may not help but please know u r not alone and good luck to you.

Your wife has to be on board if you want to start dealing with the stepdaughters behavior. I'm impressed that you've put up with this for so long, I couldn't handle it I don't think.

This is what I would do:

-Sit down with your wife when it's just the two of you and have a serious talk
-Make it clear to your wife that the situation has become unacceptable for you.
-Tell her what it is that you need to see changing (for example SD moving out within 3 months or SD paying rent and doing chores - this is up to you to decide but I would want her to move out if I were you)
-Show empathy for the fact that your wife's parents set a terrible example so she never learned from them how to parent her own children. But this is not a reason to continue on and accept the situation for what it is.
-Explain that enabling the SD this way is not an appropriate way of showing love for her daughter. It is actually harming her.
-You cannot expect your wife to just change her own behavior towards her daughter overnight but you can suggest to work together towards change, perhaps with the help of a counselor. Set goals and deadlines together.
-Theny you'll have to sit the SD down for a talk and let your wife explain what you two have decided upon.
-It is crucial that you follow through after this.

I do wish you all the best!