I feel your pain man. To live in a world where a women can steal a man's sperm, and there being no repercussions.
Just think of the outrage from the left if a man stole a women's eggs!
In a weird way, she kinda raped you man. She raped you in a biological sense, in a financial sense, and in an emotional sense.
It's really hard trying to advise on it, of corse not I or anyone in this forum wants to tell you what to do. But IF I was in your situation my primary concerns would be protecting my daughter for physical harm, If that meant talking and having mediations with the bitch, so be it,... also not letting my ex or my bio family rip me apart from my current wife.
It sounds like your wife is very intelligent and loving, don't let these people come between you and her, it sounds like you and your wife are currently in a lot of stress.
Also get some actual friends in your life, you need a support network!
When you were involved with Sarah, not only did you fail to see her for what she was and act on that knowledge, but also everyone in your life failed. Either because they were just as dysfunctional as your bio family or because they simply did not care.
I honestly don't think that you will beat her in court, And I am sensorially sorry. I mean, your ex would have to be a drug addict prostitute for you to have a chance. Again if you are willing to fight in court do it, its only my opinion.