Okay, I do not normally give advice, because I find that people do not really listen to advice. They say they want advice, but then they end up doing whatever it is that they want to do. But since you asked for advice, I will give you my advice:
1. This situation is a mess! A total mess! And if you move in with friend A it will become a bigger mess!
2. Do not move into friend A's tiny basement, even though your intentions are good and you want to help them out financially. It will backfire in your face! Maintain your own independence. If you move into friend A's tiny basement it is still THEIR HOUSE! There is a saying that you never really know someone until you live with them. If you want to maintain your friendship with friend A do not move into their tiny basement with your husband and children.
3. Friend A was totally undiplomatic to tell friend B "that she's ugly because she curses, watches R rated movies, and just isn't a very good Christian woman." Of course friend B was hurt. Who wouldn't be hurt if someone said that to them? Remember, if friend A could be that undiplomatic with friend B, she can be equally undiplomatic with you too when you or your family do or say something that she does not agree with. There had to be a more diplomatic way for friend A to deal with friend B's cursing and watching R rated movies without totally alienating her. All I'm saying is that friend A sounds like she is a very judgmental woman and in time you might unwittingly do or say something that will annoy her and she will fall out of favor with you too!
So, I guess you're still intent on moving in with friend A to help them out financially. That's okay! Move in with friend A and you will learn in time that it was a recipe for disaster. Don't say that I did not warn you when it happens, but this is exactly why I do not like giving advice. In the end people do whatever they want to do!
