The important distinction here is between an Administrator Account and a Volume Owner Account, particularly on Apple Silicon Macs (M1).
Volume Ownership is a separate security privilege in macOS. It is not automatically transferred simply because another account becomes the only Administrator.
Normally, the first user account configured on an Apple Silicon Mac receives a Secure Token and becomes a Volume Owner. Additional accounts can also acquire Volume Owner status under certain circumstances.
Before attempting further recovery, I would establish the following:
- Was your original account downgraded from Administrator to Standard, or has it disappeared entirely?
- Does your daughter's account now appear as the only Administrator under System Settings > Users & Groups?
- Is the password prompt specifically requesting her local Mac login password?
- Is FileVault enabled?
Regarding password recovery:
Apple provides an official recovery procedure through macOS Recovery. On an M1 Mac, shut down the computer, hold the power button until Startup Options appears, select Options, and follow the password recovery instructions.
If necessary, Apple also documents using resetpassword from Terminal within macOS Recovery.
Apple – If you forgot your Mac login password
One important point: resetting a login password does not automatically restore Administrator privileges or Volume Owner status.
I would investigate the original account's status and the Mac's Volume Ownership before attempting further Terminal commands or considering erasing and reinstalling macOS.
Additional technical reading:
The perils of M1 ownership – Eclectic Light
Ownership means two different things in Macs: how to tell them apart