Have you talk to her mom about it. Actually talked to her instead of just mentioning it in front of her? I would if I were you. I would tell her that her daughter is hurting your daughter and while you understand that she's trying to be affectionate, it's not in a apropriate fashion. You would appreciate this mothers help with the problem. You are requesting that her daughter not be allowed to touch your daughter until she has learned to control this behavior once and for all.
I hope the other mom will be open minded and receptive, and if you phrase it correctly and in the right tone of voice, you can make it sound like she'd be doing you a huge favor and you'd really appreciate it. She's more likely to help out if you can accomplish that.