Jennifer is Barbara and Darryl Crawford's baby who was adopted/brought up by Hal, right? And Dusty is part of Johnny's life?

Yes. Jennifer slept with Craig while married to Mike (I forgot why -- she wasn't really romantically interested in him, though), and when her pregnancy was revealed, Mike had forgiven her enough to want to raise the child with her, but when it came out that Jennifer tried to frame Craig on drug charges in order to keep him away from the kid, she and Mike hit a rough spot and he ended up getting back together with Katie. Jennifer gave birth, but Craig engineered a baby switching fiasco so that Jennifer's baby would be switched with Gwen's because Gwen had agreed to let Craig and Rosanna adopt her son. Gwen and Casey's son died, however, so Jennifer was forced to believe that it was really her son who died, though this was not the case. A whole big mess ensued, but in the end, Jennifer got her son back, and she and Dusty planned to raise him together.

After a few more months of drama, Jennifer contracted a form of pneumonia and died. She and Dusty had a deathbed wedding shortly before, making him Johnny's legal guardian, but lo and behold, Craig returned and there was a big old custody battle between Craig and Dusty, and Lucy couldn't decide who she wanted to side with out of her father and new lover, so she took Johnny herself and left Oakdale. They returned later.

Is Janet's father supposed to be the villian of the month? I saw last Friday's show, well parts of it and this guy is such a cliche.

^^^I assume Rocco is. I don't know what's worse...the cliche or the thought of more time spent with a better written character to try and "flesh out" Janet.

Jen slept with Craig because she was drunk, and I think being upset because Mike was taking Katie to the airport or something. I have a vague recollection of Henry pulling some kind of strings to get Mike and Katie together. Jen and Mike got married knowing she was pregnant with Craig's child. Katie even tried to play "negotiator" between Jen and Craig---who stopped their elopement to Vegas when he realized what was happening.