Because it would be fucked up, look the poor girl is suffering from some pretty serious issues, having sex with her would be akin to having sex with a child, and incest might be morally variable, but pedophilia is plain morally reprehensible, their isn't any circumstances where their is a understandable circumstance for it. As for why its one of the main four LIs its simple, because its literally stated the relationship between the MC and said LI at the end of the lastest chapter, so obviously the incest here is about that relationship, since the MC's mother is dead, he doesn't have any other known family members, a half-sister is the singular option for incest.
Although on the subject of Colleen its pretty fucked up the story take the time to make us give a shit about her before basically revealing she isn't the MC's sister, because it feel like a justification for getting rid of the character from the story, it seem like the Dev decided to basically retcon their relationship so she could be dropped from the story so the MC will focus more on the LIs.