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What do you mean they lost their minds? You mean they used to allow this approach but stopped?

IRCC overlooked inconsistencies, many misrepresentations, red flags, etc. all in the name of faster processing and more immigration. Many of the people who listed their spouses as non-accompanying for higher points are now getting PFLs or even letters after they got PR.
 
Yes they have been legally here in Canada for the whole duration. I fully intend to include them in the sponsorship application but as non-accompanying, that way her biological mother can sponsor them in the future. I've also read people listing their spouse as non-accompanying to try and obtain higher scores for their express entry. This is NOT that. I want to exercise this path of sponsorship to see if it is a viable option for us without trying to seem like we're "gaming the system".

If they are legally in Canada they should be applying for study permits. If you list them as non-accompanying there is a good chance you will first get a PFL, if the VO is not happy with your response a refusal and if refused there is very high chance a 5 year ban. You should be very clear with your partner that they should be qualifying for PR on their own if you do not want to include her children as accompanying.