Hound Dog - from everything you've written about the situation with the kids, what they are lacking most is STABILITY. The issues with Kayla's reading could just be from being switched from school to school and missing out on the important "building blocks". Sure, most kids should know how to spell "girl" - but where was she when those subjects are usually covered in school? Was she in school, being switched around, or having to parent the other two kids herself? And I'm sure the lack of glasses doesn't help.
And again, with Alex, if he is autistic, or just somewhere on the spectrum, you know how important routine is for these kids. What routine has he had in his life? Katie's overprotectiveness is understandable - many parents feel that way when their child has issues. Has someone taught HER how to teach him to be more independent, even if it means he fails once in a while?
I really think without some type of long term intervention (whether that means you taking the kids, some agency getting extremely involved, what have you) there's no way these children will begin to recognize boundries, know what they should or shouldn't do, or work to potential.
