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I agree with "AlvaDeer" and "JoAnn29."
You are doing what I think is all you can do. By speaking first with your sister, fully discussing the situation with her and asking if she would like to move. You seem to have a full grasp on what your sister is doing and how she feels about it as well as about living there. After that, you went to the Director of Nursing and they had her speak with a psychiatrist who will be changing her medication.
I'm glad that staff are wonderful to her and that she has lived there a long time so she's well established. I do understand about people being afraid to assist her for fear of a false accusation being made as that is a "real" possibility. So maybe you could talk with the Director of Nursing again but, specifically about that issue and see what she has to say as I'm sure your sister isn't the first one nor will she be the last to do something like this having dementia issues.
Other than that honestly, I can't think of anything more you need to do. I would just hang tight, see how the new medication works and go from there. I hope it all works out for you and your sister since it sounds like she's in a nice facility - sometimes they are hard to come by especially during the pandemic.
Your sister is so young. Being isolated because of COVID may have brought this on. My friend, in a NH, had to be hospitalized because of a mental break resulting from isolation. We are not made to sit in a room 24/7 with little human contact. I would say a psych eval wouldn't hurt.
If your sister has Dementia, in her mind these things are happening. The staff at the NH should be very aware of how Dementia works. With Dementia a person loses the ability to reason, to comprehend and process what is being said to them. Their reality is TV and dreams. They start living in a world in their own mind. They become paranoid. There is no cure and meds do help.
So sorry this is going on and I hope medication changes will help. There is a tendency to slip easily, in brain problems, into paranoia. We, as humans, are quite normally and quite naturally "self-protective " by nature. In bad times it goes to paranoia, and is quite common. You are handling it so well, I think.