The original poster started a new thread where he stated a using different MS account for his daughter worked to resolve the issue. I had the same experience (created a new account without family safety enabled) - so I guess it is somewhat confirmed that the family safety settings do interfere with the game (from 0.3 onwards).
I do agree with the above poster though and there should be a granular control to resolve this - turning off family safety or creating a new account just for grounded is a pretty poor "solution" (and one I would record as a workaround, not an answer).