1. File partition suit for formally dividing the property by metes and bounds with the help of the Court,
2. From the copy of the said gift deed you will understand whether it has been registered or not. If it is not registered, the said gift deed is not valid,
3.& 4. If the Gift Deed is found to be unregistered, hence invalid, the subsequent sale of the said part of the gifted property also becomes invalid,
5. & 6. As per recent Judgement of supreme court the 1/3rd division is valid, if your grandfather has demised before the year 2005. Otherwise it is invalid,
7. Yes, she can gift her share of the property to any body without having blood relationship.