2. Hukou has nothing to do with inheritance. Generally, notarial certificate or court judgment is needed to handle property transfer procedures. Your situation is rather complicated. I suggest you confirm the property right through court judgment. If you want to sell, you have to confirm the property rights before you can buy or sell.
After the court confirms the property right, one party wants the house and the other party pays for it. So you can choose the house and award it to you. In that case, you don't have to worry about your little sister.