I completely understand why you are concerned. It bothers me that she hasn't stopped despit the fact that you have not only talked to her about the cold sores, but that you have directly addressed the issue of your young infant.
There could be several reasons she is not listening. Either she just doesn't get that there is a risk, or she is just not respecting your wishes.
Here is a site that talks about the cause of cold sores:
http://www.emedicinehealth.com/cold_sores/page2_em.htm
If I were in your shoes, I would print something similar out and share it with her. Your infant is only 7 weeks, and I'm shocked that she isn't listening to you. Sometimes, facts in print carry more authority than a verbal explanation.
Make sure to validate your gratitude for her interest in you and your daughter. Not everyone has family that want to be involved. You are lucky to have family that value your daughter and want to be part of her life.
Make sure that she knows that you want her in your life, but that you need her to respect your concerns about the cold sores.
I hope that she responds.