The court found that she had sufficient connection to the US (including having lived in the US for years, and having children who were born in the US and are US citizens) to give her legal "standing" to raise these issues.
However, non-US citizens outside the US generally don;t have any right to challenge denials of US visas in US courts, which is why she remains barred from the US with no way to challenge that. (It's possible that one of her children could raise that issue in a US court, but they are afraid that if they they return to the US, the US might put them too on the no-fly list again, trapping them in the US.)
Similarly I don't know if there are cases where Canada has refused entry to a US citizen that isn't a wanted criminal (suspect) in the US or guilty of something that Canada themselves object to.
We could certainly imagine all sorts of extreme scenarios, such as the entire family secretly being spies for China, and the US tipping off the Canadians, but neither country being able to publicly reveal this, but -- assuming that these children are just innocent victims of an abusive bureaucracy -- I'd like to see them launch a case in the US.
There may be many good reasons for them not doing so, but I don't think that their ability to travel to Canada (from Europe, for example) nor their ability to travel by land between the US and Canada, is the limiting factor.
Here you go:
https://papersplease.org/wp/2011/02/16/british-man-marooned-...
https://papersplease.org/wp/2011/03/18/canadian-denied-passa...
https://papersplease.org/wp/2011/05/25/us-intervenes-to-bloc...
None of these people were scheduled to fly to, from, or via the USA.
There have also been people denied passage on fligths between other countries, merely becuase they were scheduled to pass through US airspace without landing. But that's a different issue from the incidents reported in the links above:
https://papersplease.org/wp/2009/05/16/air-france-passenger-...
https://papersplease.org/wp/2010/06/07/another-paris-mexico-...
https://papersplease.org/wp/2011/07/25/mexico-barcelona-flig...
In this case, it was entered as DR. RAHINAH IBRAHIM, an individual, Plaintiff-Appellant, v. U.S. DEPARTMENT OF HOMELAND SECURITY; TERRORIST SCREENING CENTER; FEDERAL BUREAU OF INVESTIGATION; CHRISTOPHER A. WRAY,* in his official capacity as Director of the Federal Bureau of Investigation; KIRSTJEN NIELSEN, in her official capacity as Secretary of the Department of Homeland Security; MATTHEW G. WHITAKER, in his official capacity as Acting Attorney General; CHARLES H. KABLE IV, in his official capacity as Director of the Terrorist Screening Center; JAY S. TABB, JR., in his official capacity as Executive Assistant Director of the FBI’s National Security Branch; NATIONAL COUNTERTERRORISM CENTER; RUSSELL “RUSS” TRAVERS, in his official capacity as Director of the National Counterterrorism Center; DEPARTMENT OF STATE; MICHAEL R. POMPEO, in his official capacity as Secretary of State; UNITED STATES OF AMERICA