As a parent, I greatly respect your efforts here. If you would like to care for the child, you can file a petition for guardianship (the power of attorney ended when your friend passed away and is not relevant).
To file in Colorado, the child would need to be present here when the petition is filed (i.e., the sister and great aunt would need to send the child here), otherwise you will need to file in the other state in the county where the child is residing. There are quite a lot of hoops to jump through, and the assistance of an attorney can be quite helpful in these cases. I hope this helps.
Answered on Jul 18th, 2013 at 2:14 AM