Yes. Narcolepsy is a genetic abnormality and can occur in multiple family members although many single isolated cases also occur. Symptoms generally begin in adolescence. There are tests that can be done to see if you have the genetic susceptibility to narcolepsy, but they don't necessarily indicate you have the condition.
Possibly. There is a genetic connection with narcolepsy, meaning it can run in families. However, having the genetic risk alone is not sufficient to cause the condition. Some other unidentified event appears needed to trigger the development of narcolepsy. Has your sister seen a sleep specialist yet? That would be necessary to make the diagnosis.