I used to get great yarns at School Products in NYC. They are still open and you can shop online. They have frequent sales. ; )
you can always knit a tension square to make sure your friend's knitting style (loose or tight) matches the manufacturer's guide for no. of stitches/rows per 10cm/4" square (usually) or just measure a section of that arm. Looks great to me I've started picking up vintage balls of 100% wool when I find them because it's so expensive to buy new nowadays. I tend to only find quite fine yarn though.
Shaking my head in wonder - at your sister-in-law's skills and at what a great sweater this is going to be!
One of favorite yarn resources is knitpicks.com The Palette fingering weight is great for use with many vintage knitting patterns and the color range is huge.
