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I see that no one has answered this post. I'm applying what I know of family trees and inheritance to piece this together, but would welcome a correction if there is an expert who reads this and finds my answer incorrect.
To make this easier, let's give everyone a name.
YOU = Tyson
YOUR SISTER = Suzi
YOUR SISTER'S HUSBAND = John
NEPHEW = Billy
If I'm not mistaken, Billy is absolutely nothing to you... legally anyway. Mary's connection to Billy is by marriage only therefore, yours is marriage plus one more degree of separation (Mary). Perhaps you could call yourself Billy's Uncle In-Law, but even that, I don't believe, is technically correct. Legally speaking, if everyone in your family and Billy's family died except you - you would probably not be able to claim Billy's inheiritance based on a family connection.
Also, legally, you have no blood connection to Billy. If you had a daughter, she could marry Billy and it would not only be legal, but genetically safe as well.
Now, if this is a brain-teaser, Suzi and John's nephew, Billy, could very well be YOUR SON. Or, he could simply be your NEPHEW if he is the son of another sibling of your's and Suzi's.
At any rate, the kid will probably never meet you except at some random wedding or family reunion, in which case, he'll just call you Uncle Tyson. It has such a nice ring to it though, you might as well get ALL the kids under the age of 10 at that wedding or reunion to call you Uncle Tyson - whether they are relatives or not.
Nephew is a son of (1) one's brother or sister, or (2) one's brother-in-law or sister-in-law.
Your sister's nephew of the first type described above will be your nephew also. There will be no difference between the the relationship you or your sister have with that person.
In the second case, your sisters nephew will be described as your sister's nephew. There is no particular term used for this kind of relationship. But perhaps it will be clearer if you described that relationship as "your brother-in-law's nephew", the brother-in-law being husband of your sister.
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