An honest (though age appropriate) explanation for why the parents have separated is necessary so that the child has less reason to blame herself ("Mommy and Daddy don't get along with each other anymore, but we both will always love you"). Any anger between parents is likely to be taken on by the child if she is a witness to it. The parents should also avoid making negative remarks about the other parent in the child's presence.
There are a number of books that parents can read that talk about managing children's reaction to divorce. There are also children's books that discuss separation and divorce that either parent can read to/with the child. If you go to your local bookstore and look in the parenting section or in the children's section, you might find a suitable book that you can send to them. If the behaviors continue, your brother and sister in law should talk to their pediatrician. It may be useful for them to see a psychologist, and the pediatrician can refer them if necessary.