If you love her and want her in your life, then you are going to have to accept the situation. I do not believe that one chooses to be gay. I do not believe that one wakes up and says "I think I will be gay today". You are or you aren't. At least she realized it before ruining a marriage.
Bear in mind that your family could be torn apart by this, one side with her, and one side against her. Look past the gay at the person before you decide. Know that if this is truly her, that she will never change and that you are at a crossroads here. One way will exclude her from your life and will most certainly cause attitudes and tension. In the future you may regret this decision. The other way allows her to be a part of your life and allows you to maintain a relationship. Remember, she is family, and she will always be family. You cannot ever change that.
I was faced with the same situation, and I chose to keep that person in my life and accept them as they are, and it is richer with them than without.
Research disagrees with your liberal position there; however, every adult must choose how to use his or her sexual behaviors, even heterosexuals. Many heteros live alone rather than commit sin. Homosexuals don't seem to believe this is even possible.