My significant other went to the Harmony Institute last June. It was the most traumatic thing I have ever been through. I completely relate to the anguish you are experiencing. We know many people who have been completely sucked into it.
If you haven't yet, go to the Awareness Page,
and read the guest book all the way through. There is a battle of sorts that takes place there regarding Harmony and Impact. The stories they tell and the rationalizations they make are truely disturbing.
No matter what, don't let your wife return for the next level. It's more of the same horror, only worse. One person we know who dropped out after the second level of Harmony, said that his group decided he had some unresolved issues with his mother, despite his belief that he did not. They wrapped him in a blanket and 20 people held him down until he talked about it. We asked him if he was the only one, and he said there were 4 or 5 other people in the group they did this to, which leads me to believe it's a common practice.
They will do anything at all to break each other down.
I was able to keep my s/o from returning, and after about three months he fully realized what had happened to him. He has told me that he believes that had he returned for the other levels, he would have been lost for years.
I understand that you want to help your brother-in-law, but it sounds as though he is in very deep. Don't expect much right away. You have to erode three years worth of programming, and it can't be done overnight. He's seen your reaction before. It happens every time they send a new group home. They have their rehearsed answers for every objection, and they don't even listen to what you are saying.
Your wife is your first priority. They will try to work her over and get her back. It almost worked with my s/o. He turned on me, told me to leave. It took a lot of work to get him away.
I'll keep checking in, if you have questions, or anything.