I use to be a home Daycare Provider for 5 years and though my daycare's name was Little Angels....my daycare parents dubbed it, BOOT CAMP for kids. I was very strict yet loving and more times then I'd like, I'd get a new kid in their because a parent referred them to me cause "I CAN FIX THEM" as they put it. I did "fix" them but let me tell you what, it's not a daycare providers responsiblity to instill some discipline into a child, it's their parents but together, it can be done providing the parent doesn't forget that they are "THE PARENT."
I'm going to tell you what I would have done in your case.
First off, you need to sit down with this Mother and tell her;
I really need you to help me out in order for me to help you out. Your children's behavior in my home is UNEXCEPTABLE! They aren't listening to me and once you walk in that door, what little good behavior I have gotten off of them, goes down hill cause Mommy's here. Either they straighten up, or you'll have to find someone else to care for them. Especially since my daughter has started picking up on their mistaken behavior and I won't allow it.
Now mind you, she may either ONE, get really offended and take her kids and never come back or TWO, apologize and work with you.
If you really want to help her, you MUST be honest with her. I had a parent like this and her child was TERRIBLE! When I told her I was terminating her contract after 3 months of hell, she cried and begged for another chance. Her son did a 180 degree turn and from their on started behaving.
Then you are going to set some rules in the house and you are not only going to sit them all down, including MOMMY (yes their Mother must listen too) and you are going to discuss it together.
Their is No Running in the house because you can get hurt, that is for outside time. You will respect my things because this is my house and I worked very hard to buy the things I have and if you break something, Mommy WILL have to replace it. You will respect me and my home and I will respect you. You will wash your hands before and after every meal, after picking your nose, sneezing and after playing outside. Toys will be shared and picked up after you are done playing with them before you can start playing with something else. Lunch time is at such time and then we nap. If you don't nap, you will sit quietly reading a book or doing a quite project on your own, respecting those that do want to nap. We do not hit, bite, punch, kick, or hurt anyone in any way. If you are hurt by someone you will come to ME and tell me and I will deal with it accordingly. TIME OUTS are no longer going to happen.(because they are not effective honey, let's be honest now) If you break the rules and do not do as I say, I will call your Mommy and you will go home for the rest of they day. Three strikes and you're out. I will not and don't have to tolerate mistaken behavior in my home. ALSO, when Mommy or Daddy pick you up, the rules still apply. Just cause they are here doesn't mean you stop respecting me or my home.
*Explain to Mommy that if their child is out of control you WILL call her to come pick them up* Mommy obvioulsy doesn't want to have to leave work for this so she will see to it that they behave. ;)
It's your house, your kid and your rules otherwise, out they go. Don't let anyone step all over you cause trust me, they will. Running a home daycare isn't easy and it takes someone with a spine to do it, trust me. I did it for 5 years and though rewarding, it's also very difficult.
Good luck. Feel free to contact me anytime.
Oh, and as far as your daughter goes, you sit down with her and tell her, that what these children are doing in not correct and that you will take her toys away if she doesn't behave. She would have to earn them back one by one with good behavior. It would help too if you make her the "naughty catcher" This is not tattle telling it's simple catching someone doing something wrong and saying, that is not nice. This will allow her to be Mommy's helper but at the same time learn to separate right from wrong in others thus keeping her from doing it too.