I think there is a lot going on here and maybe wires are getting crossed.
You say you don't want to go to the wedding because your sister has invited family members who didn't acknowledge the death of your daughter. How close are these family members? Siblings? Cousins? In-laws? It's an horrific thing to happen, and sometimes people don't know how to react. Yes, it's not nice, and it's not ideal but people rarely do such a thing out of malice, it's more out of awkwardness, and then out of not wanting to upset those closest by bringing it up later.
You then say the wedding is 3 days before your daughter's anniversary and you just don't feel able to go.
That is perfectly valid. But if your sister's friend doesn't know that then she thinks you're not going to your sister's wedding because of other people who are. And your sister must have said this to her in order for her to come to you with it.
About a year ago a work colleague who I would be on "friendly work colleague" terms with lost a baby at 19 weeks. I didn't know she was pregnant. Not many people did. She had just started announcing it to those colleagues closest to her. First I knew she was pregnant was when my friend, who is a close colleague to her told me because she was upset, and she was also doing her best to cover her work while she was away. As not many people had been told she was pregnant, not many people were told she had lost the baby.
I have never acknowledged it to her, not because I don't care, but because it didn't feel appropriate. I often pass her in the corridor and smile and say hi, she smiles and says hi and she hurries past so as not to give opportunity to stop her and talk to her. She is a really lovely person, and I think of her often. But I have never mentioned it. It was something that wasn't exactly public knowledge and I feel she doesn't want me to say anything.
Maybe this is something like your family members are feeling?
You have every right to not go to the wedding. But maybe speak to your sister and make it about why you can't go (not being able to handle it so close to the anniversary) rather than about who else is going. And ask your sister to tell her friend to butt out.
I am terribly sorry for your loss.