My 90+ year old mom has enjoyed Sardine Factory (they have their own parking lot with a direct entrance to avoid the front stairs and various dining rooms to select what type of atmosphere you want to enjoy). She picked the lounge area near the front entrance but not in the bar (because she wanted to people-watch and enjoy the early dinner specials).
She's also enjoyed Fandago Restaurant in Pacific Grove: http://www.fandangorestaurant.com/
While we were there for a weekend lunch, a group of 8 ladies enjoyed a birthday celebration in a semi-private nook off the front room which might work for your group.
Note: Mom thought Passionfish in Pacific Grove was too loud when we did an early dinner there a couple years ago for her birthday even though she enjoyed the food.
701 Lighthouse Ave, Pacific Grove, CA 93950
223 17th St, Pacific Grove, CA 93950
701 Wave Street, Monterey, CA 93940
I don't live in the area, but I'm there often and could suggest places if you could narrow it down a bit. There are so many places that would be appropriate for her b-day. What is your MIL's favorite dinner...Italian, steak, seafood, French? Is a view important? Do you have a budget?