I don’t think there’s any point trying to work out how the DD could be better parented. Your friend’s DH is already at his wits end, your friend probably isn’t having a great time either but may see no other choice. She’s probably been doing the best she can. You may well be right that the DD would do better with some routine, but that doesn’t mean that’s the advice your friend needs from you right now. And even if it was it’s highly unlikely that a routine instigated now would make the holiday better.
I think you should look for alternative accommodation, apologize to your friend for ditching them but tell her, as kindly as you can, that there is no way you can stay and subject your kids to this environment as their holiday. If you can get some accommodation close enough, you could arrange meet ups with, say, just you and the mum for an evening. If it would be well received and you want to, offer for their older DCs to stay with you, it sounds like they could use a break from their sister. If you feel up to it (I don’t think I would), offer to take the DD for a few hours one afternoon or evening so your friend and her DH can have a small amount of respite.
Try to be clear about your needs without criticising her parenting. If she asks for suggestions tell her what worked for your DS and your experience of trying different things, of getting over the hard parts, of how long it took for helpful approaches to have an impact. Etc. And point her towards resources. But don’t be another voice that just tells her she’s doing things wrong and, in effect, that it’s her fault. Even if it’s the case, it’s not going to help her change.