Yes, the wife of your wife's nephew can support you as the principal applicant. But there is a big BUT. If I understand the wording from the mpnp website correctly, you'll be awarded only 50 points for having a distant relative(the wife of your wife's nephew) in Manitoba what makes almost impossible to be selected from any draw in the near future as a cutoff currently hovering around 560ish points. On the other hand, the nephew of your wife is still considered your close relative and if the nephew will be your Manitoba supporter then you'll be awarded 200 points for having a close relative in Manitoba, and 200 points including other points in total will give you a pretty good chance to receive a letter of advice to apply mpnp.
Nevertheless, if you make your wife the principal applicant, then the wife of your wife's nephew can be her supporter and award her(in case she is the principal applicant) 200 point for having a close relative in Manitoba.
Just to make my reply short: the nephew is your close relative but his wife is not. But for your wife, both the nephew and his wife are considered close relatives.
Familial relationships
To be considered a close relative, a Manitoba Supporter must be related to the applicant (or the applicant’s spouse) in one of the following ways:
- sister or brother
- niece or nephew (ex: child of your sister or brother)
- aunt or uncle (ex: brother or sister of your mother or father)
- first cousin (ex: child of your aunt or uncle)
- mother or father
- grandmother or grandfather
https://www.immigratemanitoba.com/immigrate-to-manitoba/swo/swo-eligibility/