how helpful guidnunc. Someone posts worried about their child and you are concerned for their grammar. Nice to see your priorities are sorted.
Borderslass - am I right in saying that your sil thinks it is your daughter who is bullying the niece, and you have a printout of your niece bullying your daughter, but your sil won't believe it? Give her a copy and say "take this to the police then"
you say your daughter is no angel (who is?) is there any chance at all that she could be bullying or could have bullied? - just because she is unhappy and worried doesn't mean she doesn't or hasn't bullied others herself.
You need a meeting with the school again, to sort this out.
your sister in law is harassing your daughter? How so?
What do they think your daughter has done? Are you 100% sure there is no truth in what they say? Of course, your job is to protect your daughter, but you can only deal with a situation when you are in full possession of the facts.
See, what doesn't make sense is that your daughter was called names by your niece, and your sil went to your mil about it, complaining about your daughter - what did she say your daughter had done? Had she?