Then it's on the buyer to register, get new plates, buy insurance, etc.

I would not sell a vehicle without: (1) a signed bill of sale (stating clearly that the vehicle was transferred in "as is" condition for $X amount on X date, and (2) a title signed over to the buyer

Not much help to your sister now, alas. Your sister should collect all evidence she has of the sale (a listing? a record of payment? notice to her insurer?) and try to convince the state that she had sold the car at the time of the crash