I've never ever heard of a Spanish Isobel. Maybe she just liked that spelling, but it's absolutely not how anyone would spell it in Spain. And if you google "Isobel nombre de niña" you just get loads of references to it being the Scottish spelling of Isabel. Where does your SIL live? I'm really intrigued a Spaniard living in Spain would use that spelling and say it's normal.
Not being arsey or anything, just intrigued.