Oh you poor thing!!! Sounds like a ruddy nightmare for you!!!
I'd be tempted to sit the dad down and fully explain how you feel, even show him this post??? And tell him that unless he helps you discipline HIS children you'll have no choice but to walk away from them all (hopefully, it wont get to that, the threat alone should work).
I don't understand why if a therapist stated only an hour's worth of XBox per day his dad allows him on it all the time? Is it simpler to leave them to their own devices than to spend time with them for him do you think?
Actually- thinking about it, that's probably 99% of the problem.....dad would rather be doing anything else than spending time with the kids, they sense this and play up.