Your question is very complicated. Was your father competent when he gave away his money - by that I mean, was he oriented as to time, date and place, and his surroundings, did he know who his daughters were (are you one of them?) did he understand the consequences of his actions, and did he know the natural objects of his bounty? That means that naturally, people leave/give their money to their spouses and their children.
Also, was your father acting under duress? Was he in fear that if he did not give his money to them, that he would be abandoned (left without care), or that he would die alone? Did he feel threatened? Was he coerced into making the gift?
Since they never divorced, and from what you wrote it appears that there was never a legal separation, his wife remained his wife, and she retained her right of election under his will. Since there was no money in his estate, there is nothing to elect against. As he died first, her will is of no consequence, as it also appears from what you wrote that they had no children in common.
However, if when she changed her legal documents she signed over property that she held jointly with her husband for the purpose of excluding his children, without his knowledge or consent, a claim could be made by his heirs that, if he was incompetent at the time of the exclusion, that there was an improper taking that amounted to fraud.
She can still elect against his will, claiming duress and coercion, and that his transfer of money outside the will was improper and caused by duress and coercion, regardless of her change to her property. A possible defense would be that she transferred assets that they jointly held to herself (or herself and her heirs) alone.
That she did not live in NY is irrelevant. Your father did, and that is the location of his assets and estate. That is where any proceedings challenging the will and any transfers must take place.
If I haven't understood your questions correctly, the above answers won't be accurate. I suggest that in any event you contact an attorney who practices trusts and estates law, or a general practitioner familiar with the field. Good luck.
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