added gift card to wrong microft account

You can try contacting support to see if they can do anything, but otherwise, nothing can be transferred between accounts. http://support.xbox.com/contact-us You can check
to see if the skins give the option to purchase as a gift and purchase them with the mother-in-law's account for the kids, but skins may not give that option.

I apologize for not answering your other question. As for adding more gift cards to the account, were you only signed into to your son's account on the Xbox when you added the gift card? If not, try signing out on all other accounts on that Xbox before
adding the gift card. It shouldn't matter, but worth trying.

How can I access the gift card? In my order history when I purchased the gift card it says i got "miscellaneous credit" of $1.25 added to my microsoft account, not a gift card.

Payment method doesn't matter. You can use credit card, Paypal, or currency from gift cards. You won't get credit for adding a gift card to your account.

Yes, Games can be purchased with a credit card, Paypal, or by adding an Xbox gift card to your account.