on what basis did the home get the name Todd ? - have you asked for a birth cert in this name? Your MiL is very probably correct that she was known as Kelly but was she registered at birth as Kelly ? (its a wise child that knows that!) - have you a Kelly b. cert ?
The entry reads Father drowned in Douglas Bay. Mother resides Post Office Lane (Douglas)
Sister of TODD, Johannah # 40. Entry reads Johannah Todd, sister of Sarah, eventually went to Quarrier's Home, Glasgow 26 Aug 1889 (no reference regarding emigration found). A further entry in the Daily Journal Minutes 13 Dec 1894 reads Johannah Todd placed with Mrs Peter Davis, Garston. To receive £10 p.a. as a general servant (- for that Johannah must have been 14 at least)
Emigrated to Canada. Sailed from Glasgow in charge of Mrs Davis and Miss Bilbrough date 6 May 1887
Post Office Lane only had 9 houses in 1881 but some were multiply occupied - no Todds of course but there is a Kelly - try this one - a 14 year old daughter but of whom - I assume Lucinda - a very very non Manx name? Ann Jane could go to Joanna ? (age about right as well)
Onchan 5 Post Office Lane KELLY Thomas Head M M 31 Mariner Santon IoM
Onchan 5 Post Office Lane KELLY Lucinda Wife M F 32 --- Ballaugh IoM
Onchan 5 Post Office Lane CROALL Lucinda A. Daur - F 14 Milliner --- Scotland
Onchan 5 Post Office Lane KELLY Ann Jane Daur - F 2 --- Douglas IoM
Onchan 5 Post Office Lane FITZPATRICK Mary Head M F 43 --- Patrick IoM
Onchan 5 Post Office Lane FITZPATRICK Wm. Henry Son U M 9 Scholar Douglas IoM
Onchan 5 Post Office Lane FITZPATRICK Thos.Herbert Son - M 6 Scholar Douglas IoM
Onchan 5 Post Office Lane WOOD Christian Head M F 36 Grocers Wife German IoM
Onchan 5 Post Office Lane WOOD Joseph L. Son U M 19 Bakers Porter German IoM
Onchan 5 Post Office Lane WOOD Hannah Jane Daur - M 17 Tailoress German IoM
Onchan 5 Post Office Lane WOOD James Henry Son - M 15 Tinsmith Patrick IoM
Onchan 5 Post Office Lane WOOD Selina Mona Daur - F 6 --- Marown IoM
Onchan 5 Post Office Lane CLARKE Robert Son - M 17 Mason --- Scotland
Onchan 5 Post Office Lane KELLY James Head W M 56 Tailor Rushen IoM
Onchan 5 Post Office Lane KELLY John Son U M 25 Plumber Douglas IoM
Onchan 5 Post Office Lane KELLY Benjamin Son U M 22 --- Douglas IoM
Onchan 5 Post Office Lane KELLY Robert Son U M 19 Cabinet Maker Douglas IoM