Ms McLeod, 35 and Aaleyn, 6, Matilda, 5, Wyatt, 4, and Zaidok, 2, were killed when her small SUV was involved in a head-on collision with a truck on May 27, 2019, on the Bunya Highway at Kingaroy northwest of Brisbane.
The second day of the inquest in Brisbane on Thursday heard testimony from two of Ms McLeod's friends and a childcare worker.
One friend said they overheard a female police officer tell Ms McLeod that an investigation would not continue into an allegation that Matilda had been sexually assaulted by Mr McLeod as officers had concluded that the child had been "coached" on what to say.
Mr McLeod's barrister, Amelia Hughes, on Wednesday challenged claims by another witness that she saw Mr McLeod ask Matilda to perform a sexual act.
Ms Hughes suggested to the witness that she made up the incident because she did not like Mr McLeod, which the witness denied.
Another witness on Thursday said Ms McLeod had told her that police would not investigate Matilda's claims as they thought she had coached her daughter into making the allegation.
The witness also said Ms McLeod's "involuntary smiling" had damaged her credibility when talking to police.
The former childcare worker testified that Wyatt had twice demanded that other children engage in sexual behaviour and had approached her with a knife.
"(Wyatt) said 'I'm going to cut you like a bad guy cut me'... and 'there's a bad man at daddy's'," the childcare worker said.
The worker discussed these incidents with Ms McLeod, who said she suspected Wyatt had been "inappropriately dealt with" and had "copped the brunt of (Mr McLeod's) bad moods".
The worker said she had a policy not to automatically believe one parent over another and contacted child protective services, who advised her the matter was already under investigation.
Ms Hughes asked the worker if she discussed the claims with Mr McLeod and she said no because Ms McLeod had not supplied his contact information.
The worker admitted she attended the same school as Ms McLeod, that they had socialised, and she had never seen how Mr McLeod interacted with his children.
All three witnesses who testified on Thursday cannot be named for legal reasons.
Ms McLeod's friends also testified about the impact that her mental illnesses, including schizophrenia, had on her life.
One friend said Ms McLeod hallucinated that there was a giraffe on the hood of her car while she was driving and once thought her house was surrounded by people yelling at her.
"She heard voices telling her if she did not kill herself, they would kill someone close to her," the friend said.
Another friend said Ms McLeod would "tell one person one version of events and different version to another" and decided she had "lied" when claiming to have raped by Mr McLeod.
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