RubyPitbull is right, no quick fix and I am not sure now is a good time to confront her about anything. Make sure you spread the blanket out enough they can lay on one side, and the puppy potty on the other. Same if you move them. For easy housebreaking, it is essential puppies have room to avoid laying in their filth.
Long term, it sounds like you are not giving her good leadership. The key to most behavior problems is approaching things using the dog's natural instincts. Dogs see all the people and dogs in the household as a pack with each having their own rank in the pack and a top dog. Life is much easier if the 2 legged pack members outrank the 4 legged ones. You can learn to play the role of top dog by reading some books or going to a good obedience class. A good obedience class or book is about you being top dog, not about rewarding standard commands with a treat. Start at
Raising Your Dog with the Monks of New Skete For more on being top dog, see
Establishing and Keeping Alpha Position, Letting your dog know you are the boss