Well, I've typed out the whole story so many times, I'm tired of it, but I do not believe that I'd be a Christian today if it wasn't for playing D&D. Anything that leads someone to Christ cannot be Satanic in itself.
I've known Catholics, Lutherans, Presberterians (sp?), Baptists, Mormons, Quakers, and "non-denominational" charismatics who play. I've got second-hand information of Catholic priests who play. And one of the major developers (James Wyatt?) was a Methodist (?) minister. IIRC, Gary Gygax is a Jehovah's Witness.
That should cover pretty much every side of the issue. Many of those branches are pretty strict about a fair number of "non-Christian" activities. As an example, as a Lutheran, I can't even join the Shriners (basically, too Universalist, by my understanding), but my church's official stance on D&D is, basically, "check your motives".
Actually, come to think of it, I found that answer on the official website for my Synod. Depending on your sister-in-law's religion, there may be an official site with official answers for her.