I have had a similar situation but it was/is with both my in-laws. My hubby has been the black sheep of the family for years and now so is our tiny family, my bil has always been the favorite and now so is his family. It started to sort of unravel about 6 years ago when my fil came to the apt we lived in and accused me of locking our boys in their bedroom. Let me tell you, first of all, there was no door knob or any other way to lock their door. I had been having a bad day and I looked at him and said look at the door when he did he saw there was no way for me to be able to lock it, I then told him not to mess (put politely) with me and walked back to the room I had been in and let the door shut to where it was barely open and the man had the gall to follow me, that set me off and I let him have it, I vented six years of crap from him and held nothing back. To make a long story short, we, fil, hubby, and myself, ended up outside and the fil had the balls to call me a bad mother for choosing between my children, which I didn't and don't, I told him if he ever called me a bad mother again he'd NEVER see either of my boys again, ever, not even in pictures and that I didn't have to choose between my children, he done that for me just like he did between his two boys. The man finally saw the errors of his ways and straightened up. Unfortunately the mil didn't. My little family is still the black sheep and her youngest boy is still the best one (even though we are the ones that are always helping them out and he doesn't). He has three boys and she loves them more than my two. I know she does. When my oldest boy finally saw that his grandparents would invite him to stay the night and never the youngest one he told them that he wouldn't be staying the night again until his brother got to for awhile.
So you see, the child/children will eventually see it and if the grandmother doesn't then she is to blind to help. Your daughter and nephew will one day see it and tell grandma like it is in their own way. As far as your sister, see if she can get your mother to have more contact with your daughter, see if she'll say something like mom, it isn't right to have more favoritism for my son than her daughter. You need to love them equally, it isn't right or fair for the children. If she doesn't then phewy on her too.
Sorry for rambling. Hope it makes sense.