Hi Emma!
I don´t have an FP5 but but if I guess correctly what the steady snap option does, it seems to me that the problem with this photo of yours isn´t the steadines of the camera but the steadines of your daughter. 
You see, no matter what the vibrance reduction system in the camera is, it only takes away the shake of the camera, and it seems to me that that is what it has done in the photo. Even if your hand has shaken when you have been taking this photo, the walls behind your daughter are sharp. However, when your daughter suddenly moves, it is seen in the photo as motion blur. That happens even with the best pro cameras: if the shutter speed is slow and the subject moves, that happens.
So, if I´ve understood correctly, the steady snap option tries to eliminate the shaking of the camera. If you take the photo in a dimly lit environment, the AI or automatic photo function of the camera has to keep the shutter open for longer so that enough light can be caught on censor. It uses some tech stuff to calculate how much time is enough so that the photo is exposed in a way the camera thinks is a good exposure. In a well lit environment that time is very short, in a darker environment it tries to find a perfect balance between shutter speed (too slow = motion blur), aperture sixe (too big = not all in the photo is focused) and ISO (too high = noice in the photo).
And all that causes that if your daughter or what ever you are taking the photo of moves while the shutter is open, what happens is what we can see in your daughters hands here.
I´d suggest that if you need to take a photo in a dimly lit environment, instead of steady shot option you try the normal mode or even the RAW (or Pro) mode (is that still available in FP5?) and manually adjust the shutter speed fast enough and pump up the ISO or aperture to light the photo properly. Or let it under expose a little and then crank it up in a photo editing app.
Hope that helps.