I am a co signer on a home loan for my daughter and her husband, they are now separated.

The answer to both questions is yes (not necessarily taking the money out of the disability check automatically, but compellng some arrangement to make sure that the loan is paid), but that doesn't necessarily mean that you have an open and shut case.  It sounds to me that you were a surety for your daughter and her husband, and are entitled to be reimbursed by them for any payments you had to make.  However, a court might well hold that, as between the 3 of you, your son-in-law would only be responsible for half of the payment.  Also, if your daughter is now living in the house without your son-in-law, a court may think that she is the one getting the benefit of the loan, and shoudl be the one ultimately responsible for paying all of it.  These are issues that may best be worked out in a matrimonial proceeding between your daughter and son-in-law.