H.B.
hi K., i sympathize with you. it would be nice if you could trust your sister in law to watch your daughter for an hour or two to give you a break but you can't. no, your not being overly protective. i'm in the same boat. my brother has 3 kids all around my 4 year old daughters age and they love playing together but she's never been allowed to play at their house without me there for the exact same reasons. they're great people, it's not that they're not. i simply watch my children much closer than they watch theirs and i'm uncomfortable with them playing outside alone at their young ages. plus they've got a pit bull that i dont trust. anyway, as you can gather, i can relate! haha. you shouldn't have to deal with being the 'bad guy' everyday though by telling your daughter no when invited over to their house. tell your sister in law to stop asking! you don't have to be rude about it. just simply tell her very seriously that the answer is no everyday and its not going to change. she may be slightly offended but she'll get over it, and maybe it'll put things in perspective for her too.
good luck and God bless you and yours! you sound like a great mom to me!! =D