Your daughter should seek the assistance of an attorney qualified in estate administration in the state in which your ex-spouse was domiciled as soon as possible.
In general, "adopted out" children are no longer considered children of the deceased parent, but the actual status will depend upon state law and, possibly, the relationship between the child and the natural father. The adopted out child in your facts became a "sister" to your ex-spouse when his parents adopted her. Whether she has any rights as a sister also depends on state law, but in most cases the rights of his non-adopted daughter would have priority over your ex-spouse's sibling (adopted out daughter).
This answer is not intended to provide you with specific legal advice regarding your situation, or to create any attorney-client relationship.
My condolences to your daughter the loss of her father. You do not say what state your ex-husband lived in at the time of his death (where he had his primary residence). If he were a Georgia resident, then the biological daughter who had been adopted by his parents would normally have ceased for all purposes, including inheritance rights, to be considered your ex-husband's child. However, depending on exactly how the adoption was structured, some of her rights as his child could have been preserved. Even if the adopted daughter does still have some rights as a child under the adoption, though, your daughter is also still a child and should still have rights with regard to her father's estate. I strongly recommend that your daughter get an experienced probate attorney in the state where your ex had his primary residence when he died. It may be necessary to request that the probate court hold a hearing to determine the heirs to your ex-husband's estate. In addition, if this is a Georgia estate and your daughter is a minor, she may be able to seek an award of year's support from the estate. However, this is a complicated situation and, if she does not move quickly enough, the adopted daughter may be able to take over and dissipate estate assets so that your daughter's rights become effectively worthless. Good luck to your daughter in resolving this matter.
As stated above, adoption in Georgia severs the relationship with the surrendering parent. The adopted child cannot legally come back years later and claim rights as the surrendering parent's child. If the adoption took place in Georgia, and there are no further facts to know, then the child is not legally your ex-husband's daughter. Your mutual daughter is his only child.
To your question, the eldest child would actually be considered your ex-husband's "sister" for (and only for) purposes of intestate inheritance.
Your younger daughter would do well to hire an attorney as soon as possible, assuming there is enough of an estate to warrant paying an attorney's fee.
No attorney-client relationship or privilege is formed by this communication.
Under Georgia law, the "daughter" likely now is a sister and your daughter may have inheritance rights. Act quickly to be sure she gets counsel.
This type matter requires more detail than you posted, but let me stress that a delay in asserting rights may be very costly here.