Firstly there is nothing wrong with masturbating, if not done in
excess.
You feel its disgusting, why? Because you see it? OK granted the
sight is pornographic. Normal sexual acts if chanced upon is also
horrid. If you see your father and mother humping, it is also
disgusting. Sexual acts should be done in private. But sometimes,
privacy is invaded, inadvertantly. Thats what happened in your
case.
Next time you catch you FIL wanking, just laugh, and say, "You
enjoying yourself ah." and close the door. As DIL, please don't
assist him in any way.
Its better than him going to Geylang, or to the aunty next
door.
Let it be. Its normal.