Disciplining Children That Aren't Yours

Before I get into my question, here is some background:

I am engaged to a wonderful woman who has two wonderful girls (8 and 9 years old). Well, wonderful when they want to be. Before I came into the picture, these children were raised quite a bit differently than I was. I come from two parents who are still married and I was raised with discipline, respect and love. My mom and dad were also raised by parents who never divorced and instilled respect, discipline and love.

My fiance's children have been through quite a lot. They have a dad who has been out of the picture for many years (jail and prison). My fiance and he divorced when the children were very young (2 and 3). She left him and took full custody of the girls when he became abusive. Though they were young, they still have memories of him yelling, pulling out knives, hurting their mom, etc.

A couple years later she entered into another relationship that became abusive. Though he was verbally abusive towards her, he was not physically abusive towards her. However, he would belt the girls (by now ages 5 and 6) when they committed the smallest of infractions. He would yell and cuss at them if he was watching TV in his room and they came in. One of them has told me that she remembers coming home from first grade on many occasions and he would yell "get the &$#* out of my room you stupid little girl". If my fiance and him got into an argument he would kick them all out of the house for the night with nowhere to go. Unfortunately, my fiance worked for him and had no means to immediately escape and go somewhere. She spent months and months enduring this while she secretly saved money to leave and move far away to start over.

That is when I met her and immediately fell in love with her and her children. I have no kids of my own, and was always hesitant entering into a relationship where there were kids, but this was different. The girls were yearning to have a father figure in their life and we clicked very well.

After a few months I started seeing flags with the girls' behavior. The older one (8 at that time) would immediately go to severe anger with any issue, which even was scary at times. She would have a possessed look in her eye and would scream at the top of her lungs if I tried getting close to her to talk. I caught her scratching herself and pulling her hair out a few times when she was very upset. The younger one would throw temper tantrums like I had only seen toddlers throw. Tantrums over the smallest things such as wanting something different for dinner, not laying with her until she fell all the way asleep or not being allowed to watch tv. These tantrums would be full-on kicking and screaming bloody murder and would go on relentlessly for an hour or two. They would be so loud that I thought they neighbors would think she was getting abused.

Needless to say, I was feeling very out of my element considering the only experience I had with raising kids was with younger siblings. I saw the potential in them for becoming beautiful and loving children, but also saw the potential for drug-addicted or pregnant teenagers. This is when I had a talk with my fiance and told her they need to get into counseling. They had been through so much that it was effecting how they were dealing with emotions and I had done everything I knew how to do from my experience with how I was raised.

It took two therapists before finding the one we liked best and after a year of therapy and sticking to my guns (with discipline and rewards) their behavior started turning around. The older one's anger completely disappeared and she was very responsive to my discipline. Her and I have become very close and she listens to everything I say when I tell her to do something. The younger one is a different story. She, like her sister, respects me and when it is just me with them they are courteous and do everything I tell them to. They have realized that when I take a privilege away for 3 days that means 3 days. They know that when I tell them I'm taking them to Chuck 'e' Cheese for not fighting for a week that I will really do it. I always think about my dad's advice that he gave me once about parenting: "Punish so it stings but not not so long or often that they adapt. Reward so it's exciting but not so much that it becomes the norm."

However, when it is just them with their mom it is nothing but fighting, disrespect, anger, whining, throwing fits, etc. with the younger one. It seems that every other day I'm getting a call at work when she is screaming at the top of her lungs because her hair isn't done the right way or because she won't get ready for school. I know that earlier in her life my fiance wasn't there for her as much as she should have been. She had them young and would leave them with grandma a lot so she could go live life as a 21 year old. The year or two right before I met them, she did everything she could to make them happy and make up for those years, including giving in at every turn. I feel like I'm fighting an uphill battle because the younger one has had it instilled in her mind that "if I yell hard enough, and long enough, I'll get my way with mom."

Now, finally, here is my question:

With the younger one I have exhausted all means of discipline and rewards that I know of. I have tried reward programs with calendars and stars and toys and fun things to do. I have tried discipline with grounding, taking away tv, ipads and video games. I have used every situation as a learning lesson and kneel down and go over her why it was wrong, making sure she knows why I punished her, etc. Yet she still misbehaves and throws temper tantrums with her mom. She has an unbelievable sense of entitlement and acts like she was a princess in a past life - she is bossy, demanding, disrespectful and whiny to her mom (and sometimes, but rarely, to me). I'm in a difficult position because I am now the enforcer and the disciplinary but I'm not there to witness how the situations go down and I am punishing based on hearsay and her behavior has stopped improving.

If any of you have made it this far into the reading, I would really appreciate any help/feedback you can give! It seems that I have hit a disciplinary plateau with the younger and am at a loss with what to do next. I'm doing the best I can considering I only have 2 years now of being "dad" and am only parenting based on how I was parented. My methods have worked beautifully with the older girl but are ineffective with the younger one. Please help!