Sleep or Pee?

Sleeping 1.5-2 hours when she is placed in the Palace is really good given that you have only had her 3 days. This indicates that she is comfortable and understands where her bed is. If you keep increasing the intensity and duration of play just prior to bedtime she will keep sleeping longer.

Responding to her when she wakes up actually has two separate elements that you are trying to mold, and you need to address both but there is some conflict. First, in regards to crate training taking her out immediately and getting her to the chosen elimination area reinforces the potty training message but conflicts with "once we go to bed we are done."
Second, letting her cry reinforces the bedtime message but conflicts with potty training. The PupPeePooPalace is designed to let the puppy have an accepted elimination area while you are asleep. Make sure her Palace is in a separate area from you. Your comments about her behavior seem to indicate that she calls the shots when it comes to sleeping and this is what you want to change.