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If sister-in-law never presents the will to the court to probate it, then it doesn't do anything and it can say what it wants. In order to be effective to transfer anything, the will has to be brought into court. It is much more likely that sister-in-law will use joint ownership of assets, and not a will, to bypass this process. If you suspect foul play, get a lawyer started on this.

Somebody needs to apply for probate. In this case, it would probably be his wife and it would be started where he died. However, you say temporarily. Was he on vacation or was it an extended stay? Did he tell you it was temporary so you wouldn't get mad? Regardless, if he really live in your state, I suppose you could open up a probate there, but eventually someone will win the battle of the probate forums. If the wife opens in the other state, she can then use that to open a probate in your state to handle his property there. You need to talk with an attorney and his wife and figure out the best way to proceed.