Oh, not having the relationship you would like with your daughter AND your grandson hurts.

I think you have to do nothing more or special with her than you would do in any healthy relationship - relate to her on an adult level, treat her with respect and kindness, look for her good qualities and praise/enjoy them, do not accept unacceptable behavior from her, ask for what you want (and realize you might not get it, at least right away), do not nag or criticize, and do not do for her what she is capable of and should be doing for herself (in other words, no enabling). I realize your daughter may not be emotionally healthy but that doesn't mean you can't be.

There is a program called Al-Anon in nearly every city. It is for families and friends of people with substance abuse problems. I don't know if your daughter has or ever has had a substance issue but in Al-Anon you will find many parents like you, letting go of their guilt over the past (a relief!) and trying to find the balance between loving their children who have problems and not enabling or accepting unacceptable behavior. You would get lots of support there in your efforts.