Yes... it seems that Britain played fast and loose with the definition of "royal family", trimming it to fit whatever circumstance they wanted. Edward raised her to "Royal Highness", which he would do only for a member of his family, but then asserts that she was not part of the "royal family".
The same kind of thing happened with Ena's cousin Louise when she wanted to marry Crown Prince Gustaf. Though all the world knew that Gustaf could not marry her because she did not belong to a reigning family, the British government assured Sweden (wink, wink) that Britain considered her to be from a ruling family, and Sweden pretended to accept that.