The issue is realms. You both must be on the same realm or server in order to see one another. If you go into your options dialog you will see a realms tab at the top of the screen. Click it and you will see your realm choices. Above the realm choices it will tell you your current realm and area. One wizard needs to find out which realm and area they are on and then the other wizard needs to change to that realm and area. Boom! You can see each other. Once you can see each other and have become friends then porting to each other will auotmagicly switch the porters realm to the realm of the wizard being ported to. Another way to do all of this is to simply give your niece your true friend code. You can find this in the friends panel. Once you have given this code to your niece and she has entered it into the same dialog on her computer then you will both be friends and have each other in the friends list. I hope this helps.
You're in different Realms. (Think of it as alternate dimensions.)
Here's what you do ... 1. Both of you find some identifiable spot to meet. (You won't see each other yet.) 2. Both of you press ESC (Configuration menu) and then the last gear symbol -- the one with the two spheres. This brings up the lists of servers. 3. One of you take note of which Realm (and Area) you're on. 4. The other one of you select the same realm, and click "Go to Realm".
You should now see each other. Click on your niece's character, and add her as a Friend. From now on, all you'll need to do is to teleport to each other, no matter what Realm you find yourself in.
Oh -- and you'll need to repeat this process for all pairings of your characters. It doesn't transfer those friendships across different wizards in your account.
Since you know each other outside of Wizard101, you can exchange a True Friend Code. This will immediately place you on each other's Friends Lists and you can directly teleport to one another. To Get or Check a True Friend Code, open your Friends panel (press F on your keyboard) and click on the 0101 button.
This will open the following panel, and allow you to either Get a Code, or Check a Code. Make sure you give these codes only to people you know outside of Wizard101.