Sounds like you are doing a great job!! I think for the most part, you are just going to have too continue with what you are doing and hopefully the 1 year old "gets it" soon. She is 1 so she doesn't know what is socially acceptable yet which is what we need to teach them. She is definitely learning from her sister and some of that you can't stop but at least while in your care, they need to learn your rules.

The only thing I can suggest is a different approach for the 3 year old. I had one who was always in time out and she just didn't care anymore. I now take away toys if she is misbehaving and offer a reward if she is good all day. I have green and pink chairs and she loves the pink ones so if it's been a good day with no time outs she gets to sit on the pink chair for afternoon snack or lunch on the days she leaves early. The timeouts decreased A LOT and the misbehaviour is usually fixed with just a comment or look from me. She needed something more visual to be the consequence.