That's a horrible situation. I'm sorry you and your sister became involved in this mess. You're a great older sibling =)
Contact the urbandictionary to remove it.
Who do you believe she will tell your sister wrote the article to? Have your sister talk to them. Does this seem like something she would do? If not, the story is easier to prove already.
Also, see if you can find profile information or the ip adress of the sender which will prove your sister did not send it.
Good luck! I know someone who was involved in a situation like this, but with myspace. Myspace removed the site, and the school paper did an article on the situation, which convinced everyone it truly wasn't the someone I knew. The victim and the victim's parents are now consulting a lawyer, considering to take action against the perpetrator and the school, because the school would not punish the perpetrator.
It might have been different in the case I mentioned because the perpetrator was close to 18. Depending on the situation and your sister's age, contact the school if you have any proof that it was the "someone else". It can be considered harrassment.