I have had custody of my 8 yr old grandson for almost 7 yrs.
Were you granted custody by a court in Michigan?
Mother signed custody over when he was 1.
The mother can't award you custody, neither can the father.
Children are NOT chattel, to be bartered, sold, or given away.
The only way an unmarried female can gain custody of a child is give birth to said child (that of course can't be done my any male), a male and/or a female can petition a court for a custody hearing in an attempt to receive custody of a child (a married couple as in a male & female) (two males) or (two females), an unmarried female gives birth to a child of which she receives sole custody at birth (a male can prove paternity subsequent to birth and receive paternal rights to the child).
The female may have given you a notarized, worthless piece of paper, which on it's face has no legal significance.
Will father automatically be able to get custody when he's released?
That is a question for the felon upon his release should address to an attorney, if he wishes to receive custody of said child.
If the male was never married to female who birthed the child, the male would have to establish his paternity first, once paternity is established he could petition the court for some form of visitation leading to a form of shared custody down the road.
No parental rights were terminated for either parent
As suggested you should speak to an attorney ASAP in order to make sure no one interferes with the great job you've been doing while these "parents" were doing whatever it is they were doing.
The court would look upon you positively because of the relationship you've built over the child's time here on earth.