As a Canadian citizen the daughter is a legal resident in Canada, but the mother still isn't.
With a Canadian citizen father, it's very likely that the daughter was a Canadian citizen from birth, and only recognition of that fact was delayed. If so, then this is not a case of updating status that changed, but correction of a misstatement of a material fact -- or it would be, if the I-129F had even asked about citizenship of children. But as far as I can tell it does not.
Be very careful with any questions about overstays of Canadian visa -- even though overstay is not disqualifying from an immediate family visa, there are sure to be questions that must be answered honestly because leaving anything out could cause revocation even years after approval.