Can you describe the exact steps that you took? Was it like this?
1. You factory reset the phone with your sister's Google account logged in, without first removing the account in the Settings>Accounts menu.
2. The phone did the factory reset, then restarted.
3. Upon restarting, the first thing you saw was a screen asking you to enter a Google account and password.
If that's what happened, then you're seeing Factory Reset Protection. It's asking for the Google account and password that was associated with the phone prior to the factory reset. Assuming this phone had always been your sister's (and she didn't get it used from someone else), enter her Google account and password. Make sure you're entering it exactly correctly -- look to see if CAPS LOCK is turned on by accident on the keyboard. Do you still get the Unknown Error?