Hi Edel, and welcome

I'm so sorry to hear about you daughter - isn't it sad when the little ones get confronted with it so young... :'(
I think you must be able to find the kind of underwear you're looking for.... I don't know about the ones with a loose leg, but I very much like the seamless shorts in fabrics like tactel or other microfiber; they really let the skin breathe, and having no seams at all, they don't irritate either..... Dim do them (Dim Skin or Dim Absolu), Coccoon, and Footsie too (and an italian mark as well, but I don't remember the name... sorry...)
I, of course, buy them in adult sizes, but this being said, I always buy large or Xtra large, and I'm a size 8.... :-/ So even if they don't do children's sizes, maybe the small sizes could do just as well?
I'm not in the UK, but I'm sure you should be able to get one or more of those over there...
I've looked on the internet for them, but it seems that underwear manufacturers are not happy about cyberspace...

If you (and your daughter) would prefer something with a loose leg.... how about buying some cotton leggings for her, and then cutting off the legs at the right length? She could have some fancy colours and fun prints then, so maybe sha would feel a bit less bad about it? :-/
Take care, hug to both you and the li'l un

- and any more questions you may have, feel free to ask

Des