You have no control over her son. Your daughter is a different story.
Kids are not mature enough to handle conflict online. Years ago my daughter would IM her older brothers to the point where they blocked her. She was young and would keep IMing with silly stuff that annoyed them. Then she'd get really upset and feel it was unfair that they were being so mean.
It's your job to protect your daughter and teach her boundaries. If someone is rude or abusive, they're blocked. If she's bothering someone let her know that can provoke someone to be nasty. As an analogy, how would she feel if someone was continually poking her after she told them to stop.
If some other kid had typed profanity to your daughter, what would you consider to be a reasonable response. Perhaps your daughter would benefit from some time away from MSN until she has the skills to handle the responsibility of online chatting.