I'm going to purposely not capitalize ki and chi, but I understand that some feel that it should be capitalized. Let's chalk this up to me being tired and lazy.
I see. That explains what you believe. While your sister is correct, she also doesn't understand the completeness of chi. Chi is, for the most part, essentially the same as ki, as others have stated. You have to remember that the Japanese people are "ex-Chinese." They came to Japan and to some extent bred with the original inhabitants, but mostly they subjugated them. Some of the descendants of those original inhabitants still live in the northern most areas of the island of Hokkaido, but all that is for a different discussion. The point is that when the Chinese migrated there, they brought many of their ideas and one of those was chi. I won't bore you with all the additional info as I could go on for a long time. I should mention that I work for a Japanese company so a lot of my knowledge comes first hand from my Japanese co-workers.
Anyway... More to come farther down.
Ah yes... the measuring and testing statement... This is a perfect segue into what chi is. I have read about those tests, and should point out here that the "scientists" doing the tests call the energy they are measuring both chi and ki. Chi is the Chinese word, and ki is the Japanese. Anyway, if you read that study very carefully, there are some logic fallacies and some non scientific steps that they take to "prove" that the energy is real. It is unfortunate as far as I'm concerned as you'll read in a moment.
When I first started practicing Tai Chi Chuan, I didn't believe in the full extent of chi, but I did experience it as a youth in a very small dose. Chinese healer... again long story. Anyway, when I started learning, my teacher was an American who had learned from a master in China, (cool story, but also long) he lived there for 15 years with the master and studyed everyday from sun up to sun down. So, I definitely gave him a good amount of credit, but remained somewhat skeptical.
Before you start the martial aspects you have to learn the various exercises as these help build up the chi within the practitioner. Again, my attitude, was "okay, whatever, I'll play along." There are various exercises that you do prior to doing the "forms." These exercises are comprised of various stretches and strikes to pressure points that are intended to free up the flow of chi. I'll skip the pages of description of the specifics. Let's just say that you need to be fit to do about half of them. After a couple weeks of doing these exercises everyday, I was suddenly shocked when, in the middle of "Horse Turns and Looks to the Moon" (loosely translated), my hands began to heat up and tingle. (That is the only way to describe it really.) Note that I had been doing these same exercises with no effects for a couple weeks already. I stopped and stood up and had to shake my hands to stop them from tingling. My teacher looked at me curiously and smiled and then said without me asking, "That is chi."
Jump forward several months. All 8 of us are lined up in the teacher's backyard (did I mention this is a private class?) and he tells us that it is time for a couple of us to experience the more "forceful" aspect of chi. I sort of had an idea what that could mean but I was ready for what happened. He walked up to me, touched his fingertips to my chest and then rocked back onto his heals. His hand flew forward palm facing me, and stopped the moment it touched it touched my shirt... As I pushed myself up to my elbows from the prone position I had assumed about 6' from where I had been standing, a sudden and painful throbbing started at my back and moved forward to my chest. The teacher came over and helped me to my feet and after a few passes over what I assumed were various pressure points and chi points, the pain went away. Note, that he did not "hit" me, but rather gently tapped my chest with his palm. I had no bruise from the impact the following day and no pain. I then believed in the power of chi in an offensive use...
If you have read this far, I commend you. I'm going to stop here and sum things up, and post more later if there are questions or directed comments. To sum up my experiences, Nomadic's description of ki above very much fits with my understanding of chi as well. The primary difference I believe in the definitions that are applied is that ki tends to be somewhat restricted to the martial aspects while chi extends into the healing arts as well. I firmly believe that the actual energy itself is the same and what they were seeing in that aforementioned study. I really wish that they had done a better job with that study because I really want to know what this internal energy is and how it works. To this day I can generate it in my hands within seconds, and have had my close friends feel the energy themselves to show that I'm not fooling around.
Yes, your definition is correct, and it is unfortunate that so many take the word in such a negative light. This is why I personally refrain from using it and instead use the definition itself.