Hi Jen,
This is how our church currently handles that. I'm not sure it's the best way, but it's working ok for us right now.
The visiting child is assingned as a one-time visitor and the family bringing the child is asked to fill out at Guest Form for the child. Then Monday, our church's Communications Assistant (CA) receives all those Guest Forms and sets up the visiting kids as their own household (with the parents info if it is on the Guest Form). The CA makes an initial contact note that includes who the child visited with along with any other details from the Guest Form and then assigns the child as a contact to the appropriate age division minister.
The minister calls or visits the child and turns in new info (like siblings names, etc.) to the CA who then enters that info, too. If contact info for the child is missing, the minister contacts the family who brought the child for that information, and again, turns any new info into the CA who enters it into F1.
We have gone back and forth over how to handle relatives. Currently we leave grandkids, nieces, etc under the household of the relative that originally brought them unless the child's immediate family is considered a prospect. Relatives are kind of handled case by case right now.
Our children's ministers are big on home visits, so they really like to have the child's address. And they also want the child to receive mail at their own address. So that is one reason we set them up as their own household.
Hope this is somewhat helpful.
Emily