Ok, I'm on a PC here at work and I just tried doing what I sugested, and it dosen't seem that it'll work. I can choose another folder for the library and it changes, but the library dosen't update automaticly. I've even tried trashing the 2 iTunes Library files in the iTunes folder and no go. So that's kind of a pain.
Well even is your on a PC, if you creat an account for your daughter it should still create a new Library for her in iTunes since on the PC the music files are stored in /documents and settings/"Your User"/My Documents/My Music/iTunes/iTunes Music. So if you create her a new account it should work the same as on the Mac and give her her own Library.