One thing about the FAA regs...they are Administrative Law, not criminal or civil law. This is important for several reasons:
1) Flying is a privilege, not a right. The system will usually err on the side of the government to ensure safety.
2) The exact wording of the regs is not very important, but the FAA's interpretation is critical. If there is grey area, the admin law system will usually find in favor of the FAA. There are many apparent grey areas which have been clarified in legal opinions and case history over the years...but you would not know that by just reading the FAR's.
3) The good news is that you cannot suffer criminal penalties under the FAR's. In those cases where an FAR offense is also a federal criminal offense, normal criminal law procedures apply. A good example is that lying on a FAA medical is a federal criminal offense as well as a an FAR violation. The FAA can easily revoke your certificates for doing that, but in order to send you to jail the FBI would have to investigate and you would have to be convicted in federal court.
So...you father's reading of the regs will be useless unless he understands all of the underlying FAA policies, legal opinions, and case history.
In the case of ADD, the regs covering medical certification are VERY broad and general. The FAA publishes a manual for it's own use which goes into great detail on specific medical conditions. I can think of three broad areas in the regs which the FAA could apply...neurological, psychological, and "other conditions".
ADD is usually disqualifying, especially if you taking meds (ANY pysch med is disqualifying). You can eventually get a medical if you are off meds, your condition is improved enough, and a certain amount of time has passed (several years I think).
As far as the medical form...ANY significant medical condition MUST be reported, do not kid yourself on this. Lying on that form is a federal criminal offense, and they do send pilots to jail for that.
The best process for your sister would be to get off ADD meds, then go see an AME (FAA medical examiner) to find out what she has to do as far as waiting periods and a special evaluation (she will have to pay for this).
You could also contact an aviation medical consultant, for a fee they will walk you through what you need to do in cases like this. These guys are popular, and there others available also:
http://www.aviationmedicine.com/