I think what you and your parents are doing is exactly what you need to do for YOU all. You are right in not wanting your daughter to be around her, in and out of her life. Should she have to go through the stress you all are going through?
My sister died from drugs on New Years Eve 2 years ago. I was, for a moment, upset. Then I realized that I knew it was going to end that way sooner or later. Now she is at peace. But I had cut myself off from her drama several years before, only to have to live through it with my exab. I finally cut him out on July 4th because, after 4 years, I refuse to watch HIM kill himself with drugs, too. I had to turn him over to God.
Only you know whats best for you but it doesn't sound like your sister is ready to take responsibility for her actions but is still willing to drive you all nuts. I think you're doing the right thing, as hard as it is to do.