>>127514998She did think Powder was dead.
In the archives it's explained that at the beggining of her incarceration she spent a lot of time beating up and interrogating new Zaun criminals about her sister.
The problem is, she was asking them "where's Powder". None of them knew her by that name, only by Jinx.
So none answered her questions.
Eventually she gives up, assuming Powder is dead, the guards take this as a sign she has overcome her drug addiction because she's no longer asking new inmates about "Powder"
Really dark shit.
It isn't until she see's the drawings/photos in Cait's book that she realises her sister might still be alive.
Which is why she gets super surprised/pumped when she sees those drawings.