You did the right thing, including the choice not to lend a guitar. It's unfortunate that this co-worker Parent didn't come to you before the purchase. You telling Parent how it is won't make Child any less or more unable to play the darn thing to anyone's eventual satisfaction. Did Parent happen to mention what Guitar Teacher said about Pinky?
In your situation, if I were approached by Parent again I might make a lunch room date to let Parent experience the difference between learning a couple of chords on my guitar and trying to finger anything at all on Pinky the Cheese Slicer (depending on office politics).
Getting Pinky set-up properly might make it physically playable, it may not. Someone who does this sort of work perhaps can also judge whether the painted body has enough resonance left to make set-up worth the bother and money. I wouldn't bet on either of these, but lucky accidents do sometimes happen.
Depending on the age of Child, dressing to match her guitar may be just the ticket to bridge the timespan after pain sets and before calluses develop.