Yes, it absolutely does count as exercise BUT what we find is that we get best results with at least one round of exercise lasting 60 min. straight if at all possible. But that having been said given that you got your daughter just doing the dancing, I can understand if you would prefer to just do what you're doing! That is a lot of work to have a child, work 6 days a week and exercise on top of that. While I can't say with 100% because I don't see what you're doing, I think you are absolutely fine to continue exactly what you are doing right now.
If you are losing at least a little weight on a lower protein diet, you literally cannot be adding muscle. It's difficult for women to add muscle, it takes a lot of food and weight gain or at the least, holding steady to build muscle.
WHat are you doing on diet?? WE have a couple optional diets that may help you lose some weight (our standard sway diet may make you gain it)