Cora could of had an affair with wizard and Henry’s father found out. That could be the cause for Cora and her family leaving the castle and living in the house she is in when Regina meets Daniel. She could of either been forced to give up the baby because of the king, or hid the baby away because of Rumple’s deal and never getting Regina
That could be a good explanation for why they were booted out of the castle. If WW was a rejected child who resented her sister, it could explain why she’s now apparently taken over Regina’s castle, including her wardrobe.
My main problem is that I’ve just always seen Regina as being an only child, and would find it hard to buy if suddenly there was a sister, in particular if she’s someone who Regina’s always known existed. I know the actors don’t know all the future development for their characters, so if Lana’s played Regina like someone who always believed herself to be an only child, when she actually isn’t, that’s just something we’d have to not consider too much, but I fear it’d still bug me. It could be explained away if Cora had wiped the sibling from Regina’s memory though. We’ve seen Regina drink a forgetting potion, and we’ve also seen her wipe Henry’s memories, so something like that from Cora to wipe the knowledge of WW from Regina’s mind would be fitting.