All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad, sallallaahu ʻalayhi wa sallam, is His slave and Messenger.
Touching your mother-in-law with lust is an evil deed. You did well by repenting to Allaah, and beware of committing such a sin in the future. Please refer to fatwa 86527 about the conditions of repentance. However, according to the majority of the scholars, your wife does not become unlawful to you because you touched her mother with lust. The majority of the scholars held that lustful touching is not enough to establish the prohibition of marriage in this case, contrary to the opinion of the Hanafi scholars in this regard.
The hadeeth refers to the incident of ʻUtbah ibn Abi Waqqaas, who committed adultery with the slave-girl of Zamʻah ibn Al-Aswad, and she gave birth to a boy. ʻUtbah disclosed to his brother, Saʻd ibn Abi Waqqaas, that he was the father of that boy and wanted to attribute the boy to himself. When Saʻd saw the boy, he knew him due to the resemblance between him and his brother and wanted to attribute him to his late brother, as he had willed. Saʻd ibn Abi Waqqaas and Zamʻah ibn Al-Aswad disputed over the matter and went to the Messenger of Allaah, sallallaahu ʻalayhi wa sallam. Saʻd presented his argument, saying that his brother admitted that the boy was his son and that they resembled each other. ʻAbd ibn Zamʻah said, "He is my brother, born from my father's slave-girl." The Messenger of Allaah, sallallaahu ʻalayhi wa sallam, looked at the boy and realized that he looked like ʻUtbah, but the basic principle (in Islamic law) is that he should be attributed to the master of the slave-girl. He, sallallaahu ʻalayhi wa sallam, said, "He is yours, ʻAbd ibn Zamʻah." Then, the Messenger of Allaah, sallallaahu ʻalayhi wa sallam, said, "A child belongs to the owner of the bed (i.e. the mother's husband or master) and the adulterer gets nothing but the stone (i.e. dispair, loss or to be stoned to death)." When the Prophet, sallallaahu ʻalayhi wa sallam, saw the resemblance between the boy and ʻUtbah, he, sallallaahu ʻalayhi wa sallam, commanded his sister, Sawdah bint Zamʻah, to wear her hijab before him out of prudence. He, sallallaahu ʻalayhi wa sallam, told Sawdah bint Zamʻah, "Veil yourself from him," since he saw in him a resemblance to ʻUtbah ibn Abi Waqqaas.
As for the report narrated on the authority of Ibn ʻUmar we could not find its chain of narration. It was cited by the Hanafi scholars in their books and brought forth as evidence in support of their view about establishing the prohibition of marriage because of sexual intercourse, lustful touching, kissing, or looking at a woman's private parts with lust. We have already mentioned that the majority of scholars differed on that. For more benefit, please refer to fatwa 317488.
Allaah knows best.