Naw, not lost causes yet... I'm not a parent, I just think I know everything...
Consistency... that's what has worked with a lot of the problem kids that I've seen, if they are grounded, tehy are grounded, they don't get a reprieve for one night to go out with friends, grounded is grounded.
Mom and dad have to have the same rules,y'all are a team in this... You shouldn't be put in the position to be the bad guy, or the "Wait til your step father gets home". How's she with discipling them?
It's nice to see a parent who cares and is taking responsibility for the kids.