Grandmothers 7 Min Frosting issue

Well, a traditional 7 minute frosting is basically a Swiss meringue, so the outcome will be affected by something simple as the humidity, as well as the ratio of egg white to sugar. Recipes vary on that ratio. Those who do close to 2-1 sugar to egg white will tend not to form the crust, higher ratios will. Since we use measures by volume- 1 cup can vary. Your grandmother may not have used the same "1 cup" as you- and that can make the difference. Try adding a bit more sugar, and see if that doesn't get you the crusty part you are looking for.

I suppose some frostings might, when exposed to air, get crusty-ish or crunchy on top. Try leaving frosted cake uncovered to get frosting to set and then harden?

I don't recognize this but there are two possible sources to follow up.
One is baking sites like King Arthur Flour or Wilton.
Another is to figure out when (what decade?) your wife's grandmother either learned or mostly made this recipe.
Then you can search...there are cute and useful sites that feature recipes popular by decade.
For example, I found a retro Jell-O side dish or dessert my mother and aunt used to make.
Good luck.