I have a very basic theory that i'm working on for something regarding how this was done.
See the monks. If they had enough power to change the memory of potentially every living (and none living) sentient being on the planet, then surely they could have devised a better way of hiding the Key.
I mean 15(including pregnancy) years long Dawn has supposedly existed, and in that time Joyce and Buffy(along with the Scoobies) would have at the very least mentioned her often.
Add to that to complete that, they'd have to have sent Dawn to School in this verse so an entire school of people would need this done to them...basically it begins to feel a bit beyond the magics of the Monks.
UNLESS, The Monks, who we know were trying to use the Key for good, found away to use Dawn/Key to open up to a like 'Mirror Universe' and instead of creating Dawn they simply transfered from this universe an actual sister of Buffy and merged the universes, with the Key being merged with Dawn.
Obviously there are still kinks, like Buffy Blood, I can't remember if they say she has Summers Blood or Buffy's Blood. Also what happened to this 'alternate reality'....but its a work in progress.