I am sorry for your situation.....unfortunatley, this is a VERY common discussion for the JW's...even amoung children. They constantly are told they are the only ones who have Jehovah's special approval, and how sad it is that some people just don't want to listen.
My daughter (now 9 and being raised as JW) when she was 3 said to me after I left the cult..."Mommy, you don't love Jehovah do you?" I said..."I still love Jehovah God...and he still loves me, it is just hard for you to understand cause your little." and she said.."Well it's hard to get moms to understand"..LOL....It is kind of funny if not so messed up.
The conversations they have is something like this....."Ok kids, we have to go to our bible studies house to study with them." Kid asks..."Does so and so love Jehovah?" Reply..."We are trying to teach them to".......
Another situation....someone in a store says "Merry Christmas" to them...child then asks parents.."Why do they say that? Don't they love Jehovah?"
It boils down to them asking questions on what they observe when they are around anyone not in their cult. If you have a x-mas tree, if you have a flag, if you don't go to the meetings, if you say "bless you" when they sneeze.....there are too many things to recall that will make you obviously not like them....which will make your grandchild ask "Does grandma and grandpa love Jehovah?" She is likely told..."No they don't listen to Jehovah, but, mabe you can help them....set a very good example" (They start useing the guilt tool at a young age too.)
It is a very sad thing...and I would just try to learn the things she is being taught by asking things here on how to conteract the things that come up. Just never sway in what you believe and never act like there is a chance she can convert you or make her think you agree with the cult in any way.
The book you saw was likely "My Book of Bible Stories"
Hope that helped some, and let me know if you have anything you would like to ask me...I have been doing as good as possible with trying to get my daughter to think for herself, though I have a LONG way to go.
Lyn