There are some previous threads with good advice you may want to search out. You can deregister your old device and register it under a different bank card. You could still sideload books you wish to share. You would not be able to share apps. You could just set a pin for purchases if that is an issue. I am not aware of a practical way to limit Internet access on nooks.
Thank you for your help. I will do some research on previous threads and also would appreciate any other tips.
Keep in mind that the security settings in the Nook Color allow password protecting access to the builtin web browser and social apps. But it doesn't apply to other browsers available in the app store. However, by password protecting app purchases you may be able to prevent her from installing alternate browsers.
Personally, I would lean to setting her up with her own account. I would not want a young child to have access to all my downloaded material. If there are books you want both of you to have, excepting interactive books, you can always download the book to your PC and sideload it to her Nook.
It's a tough and important decision, so I'm glad to see you are investigating it thoroughly.