Would my sister, who studies in England on a visa, suffer retaliation if she discloses Chronic Fatigue Syndrome?
I think your fears are misplaced. Universities only wish to know about disabilities in order to make allowances for students. By declaring the disability, your sister will enable the university to consider her condition if her condition causes her difficulty in meeting the course requirements. For example, if her condition means that she is unable to leave her accommodation to turn in coursework, she may be allowed to have a deadline extension. The alternative is that she misses a deadline, and the university believes this is due to poor time planning or laziness. This is what would lead to her being removed from her course. Informing the university about the disability in advance will explain the missed deadline, and could help ensure that she isn't removed from her course. Removing someone from their course simply for declaring a disability would be completely illegal.

With regards to the Home Office, I don't think the university has any duty or reason to inform them about disability. Regardless, the Home Office doesn't care about disability, only about your sister continuing to be enrolled on her course, and attending the pointless Tier 4 census. The Home Office has enough of a backlog of work already. They have absolutely no interest in removing your sister from the country for having a disability.

If your sister is still worried about informing the university authorities about her condition, she should certainly contact her student union. Most student unions have a disability officer who is elected from among the students to help and represent students with disabilities. They are independent from the university, and have no interest in informing anybody else about things that they are told in confidence. Talking to them might help allay your sister's fears.