A child makes all of this stuff so much more difficult, doesn't it? You are protecting an innocent. It must be particularly difficult when the addict is the mother of the child. You can only do what you feel is best for the child.....they can't take care of themselves.
My son has also done the "I have to see my son or I will die" or "I have to see my son or I can't get sober." or "It hurts too bad to see my son" (used as an excuse when he would be given the opportunity to see him but was too messed up to get here). They are masters of manipulation, aren't they?
From what you have written, it sounds like you have provided a pretty good situation for both your grandchild and your daughter, under less than perfect conditions.
This is so hard, isn't it?
gentle hugs