I am sorry you and your family have experienced this.
I hope the following is helpful. I have some experience in these matters, and I'm not going in to detail about that here.
Firstly, well done for stepping up to the task.
You seem to have foremost in your mind that your daughter and grandchild need to move forward. This is a very positive thing.
I am sure that your daughter is very grateful for your help. And you helping here through this situation (and through that, obviously your grandchild) - is so important. The stronger the bonds that can be repaired between mother and child, especially at this age, the more likely the child will have a bright future. At least this is my view, and understanding of how attachments are formed confirms this.
There are more than enough criticisms that could be levelled at the Family Courts obviously. However, in the U.K. at least proceedings are intended to remain confidential. I don't personally agree with this, but I can understand how this might be in a child's interest. You will perhaps never know in full what has been disclosed there, or discussed, or taken into account.
It is bad enough for a child to have to survive a divorce, let alone emotional abuse of parent, let alone addiction in the family.
However, child does not need any relatives, friends or bystanders passing judgement on the situation. The child just needs to cope with it, and be supported in doing so.
I say this, with compassion, and I hope it comes across that way, as I have known relatives not understanding a situation in full - but still passing judgement and actually in the process doing a lot of emotional damage and not helping
I'm not saying that you are doing this, but the bottom line is, as you have already identified, the new family constellation needs to move forward and deal with the court orders that have been made.
One poster pointed out that this situation may/will need to be dealt with for the next 16 years. Wise to bear this in mind, yes the situation might change but what child (and mother( really need now is stability.
There are many fathers who are entirely absent, in prison, too far gone in terms of addiction to be present at all.
I am definitely not saying it is a good thing that contact has been 'ordered' by the Court. It may not be, but you will all want to avoid endless wrangles through the courts.
Focus on your new family constellation. You can all get through this. Show an interest and support the child's activities at school, their friends, their mum obviously. Praise your daughter, she has had to be very strong to get through this situation and she is still there and holding it together.
Two words not mentioned so far. Emotional boundaries.
Try to be clear what yours are before you go into that contact situation. Keep a log of your own as to events that happen during contact, with dates and times. You may never need it but if the fathers situation deteriorates you might.
You are doing really well holding this together right now. Hope that your new family constellation can emerge into brighter times. You can do this. All best Painting.