stuck in sign in loop on my daughters phone.

My 8 year old daughters phone ( iPhone 6 ) is stuck in some kind of Apple id password loop. It is asking for the password, which we do not know. So I try and go through the password reset process by clicking the name which also has an iCloud email address. Then scrolling to the bottom and clicking sign out. I then click the question mark inside the password field. This brings up the Forgotten Password page.

I enter the iCloud email thats displayed on the phone and I get the message:

"Cannot verify identity. This apple ID is not active"

I have my daughter registered on my account in Family Sharing. And She has previously used it.. downloaded apps etc.

So what has caused this frustrating scenario?

Thanks in advance.