Thank you for that.
It sounds like she's been a handful long before she married a much older man.
Her needing you for the difficulties she's had, and you providing that help, especially through the teen years while she was struggling socially and also with school itself, has maybe caused, at least in part, the resentment now in an *** backward kind of way.
She may now see you as the cause of her difficulties, and be aware of what she thinks she missed during those years because of her missing out. (because of the mental health issues) She sounds like she doesn't think anything is wrong with her now, nor does she have much insight or understanding, she is thinking only that there were parts of her life that she's missed, or not enjoyed, that she not only resents, but holds you accountable for.
She is only thinking in one dimension, and replacing how life really was, with how she thinks it should have been.
Then along comes a man who validates her personal perception, and probably encourages her to do what she did, in 'getting it out' or 'dealing with it', and has (likely) inadvertently, fed into her perceptions of who is responsible for her lousy upbringing (you), and by encouraging her, the thoughts and behaviour have resulted in her living a reality, that essentially is upside down.
She may not be being treated for OCD, or any of the other issues she has had a good chunk of her life, at all, since she met this man. If I'm in the ballpark at all, he has fed into her feeling like a victim of sorts, and he, by providing for her every whim, is encouraging her to believe that she has been wronged. And even if he thinks he's doing the right thing, he is feeding into this change. Like adding fuel to an already existing fire, that for years, you managed to keep a lid on.
They both need each other now, more than the world ( and reality) outside. She has a man who thinks love is freeing her from all the troubles she's ever had, no matter what she has to do to feel better about herself. He has a woman he has rescued, and is fixing, to be the person he thinks she could be, or the person she is, save for the influences of her family. Both of them seem to me to be damning the torpedo's so to speak.
If I'm in the ballpark at all here, chances are that the baby is one sure way of hurting and punishing you, for all the things she is resentful about. She's not thinking that despite any difficulties that mothers and daughters have, withholding a grandchild from you is unconscionabl. Most would put their difficulties aside and realize that a grandchild is just not something negotiable to use as a hammer to hurt you. But that is what she's doing.
What to do? I am hoping that she will become overwhelmed with all that she now has to cope with- it is no longer all about her- and as more reality sets in, you will see signs that she once again, needs you. If that happens, I would be very careful not to take the bait of the baby, in order to fall to pieces with emotion to being involved again in her life. She may allow a reunion of sorts, but will just as easily slam that door if things don't go her way. Try to negotiate with her and set firm boundaries. To give her the impression that you will jump when she says jump, will only lead to more heartbreak.
Your involvement should be under your terms, not hers. She is, after all, a married woman, with a baby, and regardless of anything else, treat her as such. Which will be the opposite of what she is used to with her new husband, but will be necessary for you to maintain any sort of relationship with her, or the baby.
It is very difficult, and impossible for many, to accept adult children, as they are. To realize that change may never come, and their lives are no longer directed in such a way that they will be productive, happy people is something to think about. You can accept things for what they are, but it is important for you to set limits and expectations for her, and not become a bouncing ball back and forth when she needs you one minute, and tosses you to the curb the next.
You can only deal with the hand you've been dealt, and the reality is what it is. Try not to torture yourself with trying to understand why things are the way they are, or to think that things will ever change. They may not. And be aware that when she extends the olive branch, it is more likely for her own purposes (help with the baby, her husband, overwhelming bills, etc.), than it is to have a meaningful relationship with you. Again, this is where you need to set boundaries, and stick to them.
I hope that I haven't overstepped how I am seeing this situation. Trying to be a bit of the devil's advocate in a way. To me, right now, from what you have said, it is more important to you to come to terms with what you cannot change.