strange setup

Hello.
My sister and her niece both have laptops, both with Vista, both inbuilt
wireless connecting to the internet by way of a wireless D-Link dls router.
The first thing that is odd is that when viewing the map on both laptops, my
sister's connection is via my niece's.
ie. Sister >>>>Niece>>>>Router>>>>Internet.
And yet we can't work out how that happened or how to fix it. Both laptops
were setup in the same way.
Looked for available networks, found the router, connected having used WEP
keys for both.

The other thing is, which probably is because of question 1, is that they
can't see each other at all.
They both have Network Discovery enabled,
Both have stuff in their public folders. and even those are shared to be
sure.
what to do?
Thank you
J