David,
First, my condolences. Problems like this can be very frustrating.
QRecall can, of course, restore the files in your sister-in-law's home folder. If your brother has any questions about the validity or content of the archive, I would encourage him to open the archive and carefully browse it. Make sure all of the expected files are there, they've been recently captured, and no recent layers are marked as incomplete or damaged. For good measure, run a verify on the archive.
You can then perform a restore on your sister-in-law's home folder (/Users/sisnlaw) or any sub-portion (/Users/sisnlaw/Document, etc.). The only, possibly unexpected, side effect is that anything that was excluded from the capture will be
deleted by the restore.
But as far as solving the problem, I'm not entirely sure this will help. If the account won't log in because of something in that user's home folder, restoring the files won't make any difference. Unless, of course, this is something that happened very recently and you simply want to rewind the account back to the point in time that it was working. In that case, I might also suggest using QRecall as a research tool. By shading the older layers just before the issue arose, the QRecall browser will show just those files that were captured (and thus changed) around the time the problem started. That might give you some clues as to what/where the problem is.
If you create a new account and recall files from the original account you will, as you mention, encounter permission problems. The captured files will belong to a different user and simply dropping them into the new account will leave you with files and folder you can't access from that account. In this situation a little terminal slight-of-hand can be used to fix things up.
Let's say the UID of your sister-in-law's account is 502, and the new account you created has a UID of 503. The following terminal command will change the ownership of all files and folders belonging to 502 to 503:
sudo find /Path/To/Recalled/Items -user 502 -print0 | xargs -0 sudo chown 503
(To find out the UID of the accounts, use the
ls -ln /Users command.)
Let me know if you have any other questions.