I agree with mkraz2 in setting a move out date with your husband's sister, and let her know now that you are going to hold her to it. (actually probably better if your husband has the talk, but it still needs to be held).
On the other hand, many families make it work where siblings share at a young age. It is probably not ideal, as one may wake the other, but it's doable. Keep in mind that your 20 month old will be 9 months older when baby is born. She will be able to handle a little more reasoning that she can now, and you'll be able to talk with her about staying in bed when baby cries, and trying to go back to sleep on her own, etc.
Also, some families keep the infant in there room for many months to a year. If his sister is still living with you, consider keeping the baby in your room until he/she is sleeping through most nights, then move him/her into your daughter's room.
Different experts will adjust the age a bit on this, but until your daughter is in kindergarten or so, and/or shows an overt need for privacy, sharing with her younger brother will be no big deal. My younger brother and sister shared a room until she was 3 and he was 4 (and then she was put in a room with my sister and I, so there were 3 of us girls in one room for a year or two until we moved again).
Another thought, semi-related. If his sister is going to be staying with your for more than a month or two, charge her rent. This may help to ensure that she doesn't spend ALL her income on non-necessary items, making it easier for her to know where she is going to get rent money when she does move out (ie she is used to paying rent, not spending that money on other stuff). And even if that isn't an issue with her, if you charge her rent, you can surprise her by "gifting" it back to her when she moves out so it will be easier on her to afford a new place.
Good luck, and hopefully her stay will be short.
Last edited by Newmom!; 09-17-2011 at 10:41 AM.
State Certified Early Childhood Special Education Teacher
New Mom as of March 2009!