She had a problem with her 3 year old and 11 year old playing outside in her own yard together? Really? I think that right there would send off some warning bells to me. I don't see anything wrong with that at all. I don't do well with micro mangers. She can't control things when her dd is with you. It's your business and you run/do things the way that works for you and your daycare. If she has a problem cutting those strings or wants to be the one to run the show then she either needs to stay home with her or hire a nanny that she can manage and tell how she wants things done. If she is making you uncomfortable then you need to have a talk with her and tell her she needs to trust your judgement and knowledge otherwise it's not going to work. If she has a problem with that then, like Judy said, it's time to move on to another family.