I am sorry about your diagnosis and hope treatment goes well.
But I don't think you can easily fix this.
I was the daughter like yours. My Mum was great but my Dad was not and I have some very unhappy memories of my childhood as a result. He was not a good parent, just as you have admitted that you were not...and frankly it doesn't matter what your reasons or excuses were.. the effect is the same.
Nevertheless I wanted my children to have a relationship with him, hoping he'd be a better, kinder grandad. (they never stayed with him as we lived quite a distance). He was ok..til he wasn't, and started with the same emotional /verbal shit that I had had to deal with (mostly putting me down at every opportunity)
And as an adult I said no more. I went no contact for quite a long time, and when (he, apparently bewildered and hurt at this) I decided to resume low level contact, I explained that if he EVER spoke to my children in that way again, that would be it.
His not great parenting affected my life choices, career choices, choice of partner (for the better , that one) to a degree that HE would never understand, just as it seems you don't.
Your job as grandparent is to be supportive, loving, helpful.. and just GREAT. You can agree consequences for behaviour together, but they are not your children and you don't just decide to 'discipline' your way without consent. I had boundaries with my kids, and jointly we decide boundaries for my grandchild!
I suspect your daughter, like me, saw history repeating itself and said 'no more'
If in time, she decides to resume contact..great.. be better at being her mother and grandmother to her children. But acknowedging your mistakes doesn't FIX them, and doesn't excuse them, sadly.
Give her space.
I had a good final year with my Dad, when I cared for him , travelling every weekend to look after him, but it took until I was in my 40s for us to have peace with each other.
In my Dad's will , his final sentence was that he knew he had failed my brother and me and was sorry, which was heartbreaking to read, because it showed he had finally realised .
Give her space, focus on your own health but do not make demands on her, it will not resolve anything.