My daughter had similar problems, and was allergic to dairy (lactose and casein) and gluten. Her gluten allergy is actually something called celiacs disease. When she eats anything with gluten (wheat, barley, rye, some oats) her small intestine gets damaged and she can't absorb the nutrients her body needs to grow well. I know some medical formulas do not have gluten any way, but if she's eating any other solid foods along with her formula, she could still be eating something that's bothering her.
Has she seen a pediatric gastroenterologist? My experience has been that a pediatric gastroenterologist will be well aware of a whole host of possibilities that be affecting her growth.
P.S. I just read some of the other posts and wanted to add a few more things. Initially, my daughter was diagnosed with severe acid reflux. Though medication seemed to help her be less fussy, she still spit up regularly, had diarrhea, and did not grow well. Our pediatrician would often say he wasn't too anxious about her growth. He would say that some children are smaller than others and she was advanced developmentally (crawled at 5 months, spoke at 12 months with full 3 or more word sentences by 18 months). Though I wanted to be reassured, my intuition suggested to me that something just was not right. I had two other children who were in the same percentile for height (around 75th), but were consistently in the 50th percentile for weight. My daughter was in the 2nd percentile or entirely off the growth curve chart for lack of growing! My husband (6', 200 lbs.) and I (5'6", 140) are around average for our height and weight, so it just didn't make sense that our child would be so tiny. I finally took my daughter to another doctor because my pediatrician just wasn't listening, and I couldn't ignore these feelings I had that something just was not right.
I would encourage your sister to consider these experiences and her own feelings quite seriously. I know what it feels like to be concerned for your child and to have a million people give you different advice or accuse you of being a bad parent because your child isn't growing well. None of this feels good. You can be a tremendous source of support, encouragement, and care at this challenging time for your sister. If your sister would like to talk to another parent, feel free to contact me personally