With your partners sister, how old is she? Is she hyper or rambunctious or overly friendly? How were they introduced? That makes all the difference.
As far as the other dog, is he being aggressive or simply teaching the puppy doggy manners? When he goes after pup, does he just growl and bear teeth? Pin down? That's normal of an older dog teaching a puppy. However, if it's full on aggression, you may want to consult a behaviorist.
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