This thread IS full of fail.
To remedy this situation I have banned LJ from this thread. His posts were repetitive, unnecessarily aggressive, and were giving me a headache.
As far as I'm concerned, if what it went down exactly the way you described, I wouldn't have settled for any less than the refund -15%. I would have grabbed the manager and the sales person that told you about the 1 week return period and cornered them both. They promised you a return (which does NOT read as store credit). It is their responsibility to honor that promise. THAT is good customer service, and THAT is what is wrong with retail these days.
But the root of the problem is this: Your sister-in-law. I agree with what was posted above. Someone take her to some beginner shooting lessons and let her do some plinking with a .22 She'll change her mind. Getting her there however... that's the hard part.