Doing a quick literature search, I can't find anything that specifically relates vitamin D and sleep quality/quantity. However, vitamin D is a vitamin that promotes physical wellbeing in a number of physical systems, and a deficiency of vitamin D could very well impact sleep quality negatively. However, there is also no evidence that taking Vitamin D supplementation provides effects on top of that provided by an already adequate vitamin D intake.
So, having said all that, it could be that your sister was vitamin D deficient and the supplement is taking her up to normal or augmented levels. Or it could just be placebo.