That is heart breaking Rocknroll and I am sorry you are all going through this trauma while the little one is fighting for her wee life.
I do agree with the others who suggest the prem birth and circumstances surrounding it may be what is hitting your daughter and now her baby has a name, she may start bonding with her.
We lost our first baby, a boy, at three weeks and were naturally devastated. When our next baby, a girl was born, I was relieved because I didn’t think history was likely to repeat itself. We went on to have two more girls and each time people (some) said they bet I was hoping for a boy this time, but I never felt the lack of a boy in our family, as such, although towards the end of his life, Paw admitted he was sad not to have had a son to carry on his name. Our three girls have produced 4 boys and one girl between them which I find slightly strange . I was thrilled though when DD3 incorporated Paw’s name as her baby’s middle name so although he never knew him, didn’t even know he was a twinkle in his mummy’s eye, he has been remembered.
Wishing you, your DD, SIL and their little one all the very best 
Permanent estrangement from young grandson


