Your daughter may be reverting to "baby" behavior since you have a baby in the house. My daughter responded to books about being a big sister. There are lots of great stories on this site about parents working with toddlers that have babies in the house.
As for potty training, I let my daughter have accidents in her underwear and immediately gave her a bath/rinse cool enough to be uncomfortable, to clean her up. It didn't take long for her to feel like going to the potty was better than getting a cold rinse.
Someone else wrote this and I may try it with my son if needed (he's only 5 months right now):
I bought a baby doll that pees and my son had to teach the doll how to use the potty. He was 3 at the time so he had a firm grasp on the HOW, he just chose not to use the potty. We made him reward the doll with tootsie rolls when she used the potty. He had to give the doll his tootsie rolls and he did not get any unless he used the potty. Well, he did not like having to give the doll his tootsie rolls so he quickly decided that he better use the potty like he was supposed to or the doll was going to "eat" all his candy. He honestly started using the potty in 45 minutes and he continued to do it from then on. Since then I have loaned the doll to several friends and they have all been successful with it. You can buy one of the dolls at Kmart for about $10. Good luck and let us know how it turns out! Oh and by the way, the doll used the training potty because she could sit on it without my son having to hold her on the big potty.