Valerianne - first of all, get your sister to contact the National Childbirth Trust. their breastfeeding support line no is 0870 444 8708. they have wonderful breastfeeding counsellors who can talk to her on the phone or in person. feeding shouldn't hurt, and, with all respect to the midwife, she may not be expert in this aspect.
I went through the same sort of problems as your sister and ended up giving ds bottles as well as breast. he went from 8lb10oz to 7lb 7oz in 2 weeks.
i had some pain but at 10 days i had a face-to-face session with a BFC where i learnt a new feeding position which got rid of all the pain, and i breastfed pain-free until 5 1/2 months. however i had to continue with the bottles at the same time as i didn't seem to have enough milk.
at 6 weeks, desperate to feed, i had a series of very tearful conversations with another bfc who gave me the following advice: don't feed for more than 40 minutes on each breast (it wears you out and the baby gets most of the milk in the first10-20 minutes in any case), don't feed more often than 2-hourly, 3-hourly intervals are best (less than 2 hours and the milk is thin, more than 3 hours and the breasts may not be sufficiently stimulated) and, above all, rest, eat and drink as much as you want. her words were "follow your appetite". within days of following her advice my milk production increased enough that i was able to drop 2 and 1/2 bottles.
also, and i know it's difficult, especially in the first few weeks, she needs to remember that she is doing well. however your sister ends up feeding her baby, whether it's by breast or bottle or both, he'll be getting what he needs most and nobody else could give him that. good luck and a lot of joy to her.