For the first timeline -
First, they were lied to about the second child's birth being a prince who died right from the start.
Second, when Shuelina did return to the palace, she had no magic left in her so there was no way to prove she was royalty because she didn't "inherit" the royal power that is always passed down within the royal bloodline. She was an easy target to kill off because of her being a fraud on their eyes so in his sense... everyone was manipulated thanks to the Red headed duo.
In the current timeliness-
We now know in fact the Emperor and Crown Prince were lied to and manipulated into thinking their "prince" has died when really Shuelina is the biological child between the first Empress and Emperor. According to this timeline, they never stopped looking for the "prince" because while being lied to they had an inkling something wasn't right. Upon detecting Shuelina's spirit power, they were relieved genuinely. They just never expected the Prince to be a princess.
In this timeline, everyone involved was lied to and the current Shuelina doesn't even know the full truth, just what she is able to recall and how the end of her life played out.
Continuing on with the second timeline,
It turns out from the start, Shuelina's powers were being drained and given to the second princess who was born WITHOUT the spirit power because she isn't the Emperor's real daughter. Shuelina was the real daughter who grew up in a bad orphanage now refined into a better one thanks to the duke's family.
Once the royal family figured out where Shuelina was, they were told the orphanage was corrupted but were too late and found it renovated with no Shuelina in sight
Imo, I don't get how this story flows. It's just so confusing every damn time I try to understand. Like...there's a high possibility that the dad and the brother was actually brainwashed or whatever.