I completely understand why you're upset; you're actually probably more hurt over her behavior because you used to be close, than you would be if you had no expectations from your mother-in-law, so it's even more painful for you because you respect her, or did in the past. I think that you can definitely still be around her if you can manage your own emotions around her. I'm really impressed that you asked her not to mention your fiance's ex around you, and then you backed up that request by leaving when she brought her up again. Those are both really healthy boundaries and you nailed that 100%. The next step would be to have your fiance talk with your mother. He now also needs to set the boundary, so that she is really really clear that certain behavior is not okay if she wants to be around you AND him. In other words, if she continues to misbehave, the consequences will be very clear to her (just like with a child, lol). If she disrespects you - and your husband needs to be very specific, "if you mention my ex in front of us again" or "if you make racist comments in front of us again", then "we will leave." And then you both leave. Your husband should say that you will both not be able to spend as much time with her if she continues to talk like this and chooses to be hurtful. She very well may take this chance to tell your fiance what she's "really" thinking (it sounds like she harbors a semi-secret hope that your fiance will reconcile with his ex and also that she harbors disrespect towards your culture or fear/concerns about your cultural differences). Those things may come out, which of course are no surprise to you, and the truth is that you can't change her mind or make her think differently. The longer that you try to do that, the more hurt you'll be, and you likely will just feel bad, because you can't change how another person thinks. However, you absolutely can and should set boundaries about how she talks to you and/or your fiance. In other words, she can think whatever she wants in the privacy of her own head, but she cannot continue to say those things aloud, if she wants to have the pleasure of either your or his company.
And then you back up those boundaries by leaving the moment she crosses them. If she then wants to make plans again, she should have to verbally agree to your husband on the phone FIRST that she will not cross those lines again. Hope that makes sense. If you and your fiance are both kind but firm with her, considering that you said that she used to be very close to you, that gives me a lot of hope that this will resolve itself relatively quickly, though there will probably be a little pushback and turbulence at first. Stay strong and don't give in, including to your own expectations that she will change her thoughts.... but again, 100% do not allow her to speak to you like that or about his ex. Hope that made sense. Good luck!