Sounds like she wants to be like the baby. This frequently happens to the oldest child. It seems to them that the baby gets more attention and doesn't have reponsibilities like going to the potty.
She may not be ready and I would put less pressure on her. Two and one half is still early for having sphincter control for some toddlers.
If you want to try something different I would recommend handling the process matter of factly if you haven't already. Take her to the potty every couple of hours and give her something to do as you have been doing. also stay with her if possible and not talk about peeing. Have her sit for 5-10 minutes. She's going to pee on some of these trips and is more likely to get the idea.
There is such a thing as too much of a focus on actually peeing. Also on giving too much praise, making it a big deal. Do you calmly praise her just for sitting? That's the first step. It sounds like you really want her potty trained. She may sense that as pressure to perform and hold back. This won't be a consciously made decision on her part. It's just a reaction to the pressure of being the big girl and having to share with the baby.
Some kids like being the big sister and are proud that they can help with the baby and be independent. Other's are more passive about all the new things. Some toddlers are outright angry about potty training. Therefore each child will respond to different methods. I think the important thing is to make going to the potty a pleasant, ordinary, everyday sort of thing. When too much importance is placed on achieving continence it usually results in some sort of resistance. Kids pick up on the parent's anxiety even when the parent isn't aware that she is anxious or is communicating anxiety to the child.
I have a friend who didn't try to potty train until her daughter was over 3. But then she had to put her in daycare and could not use the facility that she'd chosen until her daughter was trained. She put a potty chair in the bathroom along with some toys. She took her daughter into the bathroom everytime she needed to urinate. Her daughter liked sitting on the potty and so would go in there to play, sitting down with her clothes on at first. She was trained in 2 weeks. She may have been ready earlier and that's why she trained so quickly. I think it's better to train later than too early. I think that the later you try the quicker the training will go.
I wish you success. Training can be frustrating and I sympathize with you. It seems to me that 2 1/2 is early. My daughter didn't start with either of her kids, a girl and a boy until after they were 3. It did take several weeks to train them. I suspect it's because they had caretakers other than their mother and so there wasn't consistency.
There are advantages to diapers or pull ups. No running to the bathroom in the middle of shopping for example. I think that she will naturally be trained before the next baby arrives.