I agree about the earlier bedtime. My dd2 is a similar age, nearly 5 months, & I find that if she's in bed before 7, she tends to drift off no problem, but if it gets much later, she starts to get agitated. I have an older dd, who is 2.9, and initially, I was reading them a story together, settling dd1, then feeding & settling dd2, but I soon realised that this wasn't working for the baby, as she was getting very agitated & overtired. Since I swapped their bedtimes round, she usually settles really well.
When dd1 was a baby, I always fed her to sleep, which was great until it stopped working, at around 10 months! We eventually ended up having to do controlled crying when she was just over a year old, which I didn't really want to do, but it worked a treat, & she's slept brilliantly ever since! With dd2, I really want to avoid this, so I've been trying to get her to self settle, & I'm amazed it usually works! Initially, this meant letting her have a little grizzle, but leaving her to see what would happen. I wouldn't leave her doing full blown crying, but I have found that sometimes, if I start shhhing & patting, it seems to make things worse. I suppose if you were trying to go to sleep & someone kept tapping you, it might be rather annoying!
Not sure if any of this is any help to you, but I hope things improve for you soon. Remember, they're still so tiny, & there will be many things to disrupt their sleep in the future, most notably teething, so I wouldn't get too hung up about this, as it can change all too quickly!
I agree what others have said about bringing her back downstairs if you really can't settle her, we do this on occasion, & I don't believe it forms a bad habit at this age.
I also agree that you may be overstimulating with all the lights & music, & I do think that just one of you should put her to bed, it all sounds a bit full on as it is.