It is very high risk to sit with a baby in a chair or on a sofa at night for a prolonged period, even sitting up in bed. Please don't let your DD do this. It's much safer to make the baby a safe space in the bed and not worry about falling asleep then. Most children do transition fine from co-sleeping before the age of 3.
If you like the idea of a sidecar cot, most cots can be converted, I did it with mine.
You have to make sure that it stands up securely with one side removed, or it won't work, so check this first.
Then, work out a way to raise the mattress up to the height of the adult bed mattress. The safest way to do this is to raise the cot base itself, usually easiest by drilling extra holes into the cot sides to secure it at the higher position, or you can screw pieces of wood to the sides of the cot to rest the base on, like shelf supports.
Attach the cot securely to the bed, either by pushing against a wall, or tying it to the bed legs/frame. Bungee cords (like you use in a roof rack) are good but anything will do.
Push the cot mattress over so that it is flush with the adult bed mattress, and block the gap at the far side with something very firm and non-fluffy, such as tightly rolled towels.
Make sure there are absolutely no gaps between the cot and the bed, or at any corners, that the baby could get trapped in (including trapping an arm or leg). Check this EVERY night, and also things like the cot base, that it's still safely secured, or anything under the cot legs is still safely in place.
It's best not to use duvets at all near the baby, I used to cover the baby and myself with a cellular blanket, but have the duvet on my legs and feet, and wore thick pyjamas and a dressing gown to bed. If she's having the baby next to her to sleep, it's not a good idea to put them in a sleeping bag, but it's okay if they are mainly sleeping in the cot part of the bed. Swaddling isn't advised if you co sleep at all.
HTH :)