Once rainbow sharks reach adulthood they become very territorial and need a 55 gallon minimum. Also only one should be in a tank because once older they will show aggression with there own kind. The bala as you know needs a bigger tank 6ft plus. Its also a schooling fish and needs to be kept in groups of 3 plus.
The problem with this tank was, it's fish primarily picked by a 3 and 5 year old. It's a bit harder to explain why some fish can't go in the tanks with other fish. I know the rainbow sharks will eventually need to go, but right now things are quite peaceful. The fish are all doing a lot better. I'm a little concerned for the red eyed tetra's still. The rest are all pretty much back in their normal routines they had before this happened. My only question is, what size water change should I do?
I appreciate that kids want to pick their own fish and such, but you can't put the whims of the small child before the wellbeing of the fish. I'm sure you didn't take the kids to the shop but perhaps you could explain to whoever is taking them fish shopping that they need to be given some limits, even if it means a minor tantrum.
Bala needs 6 foot and at least 3 buddies. Does your family friend have a tank that big? Rainbow sharks need 40-50G and to be the only shark in the tank. Surely it'll be harder to give away 3 beautiful, large fish that the children have grown to love than it will be to give them away now? Tetras and danios need groups of 6+ and corys need 4+ but ideally 6+. Once your water levels are stable, please consider adding to this stock.
You say the nitrite test turned orange . . . what test kit are you using? Could be a mix-up with nitrate? Obviously it varies from test to test. If nitrites are the problem, then you need to change as much water as it takes to get zero. It's basic maths - 1ppm nitrite + 50% water change = 0.5ppm. You won't get true zero without doing 100% water change but with a large one (or two small ones back-to-back) you can probably get it undetectable.
Good luck!