In the book 'J.W.Waterhouse' by Anthony Hobson the author states: the model was 'probably...the artist's wife'. Not conclusive!
With regard to his having a sister called Mary, the same book lists two brothers and only one sister for him. The sister's name being given as Jessica. I suppose she could have had more than one christian name, though. Also, Waterhouse's father was a widower before his second marriage, so I suppose there could have been a half-sister called Mary. This is only speculation on my part! I think that, as they say, further research is called for!