The cancer Katia hid from the adoption agency, the same aggressive disease that killed baby Annie.
Katia was sick when she applied to adopt, and tried to hide it. Fannar told the agency the truth, and the application was denied; the caseworker advised her to go home and focus on her own health. Watching the memory with Carl, Katia says she should never have tried to hide it, but insists she was fine and would have been for a while. Long enough.
Baby Annie had brain cancer, which Katia describes as such an aggressive, evil thing, and she notes bitterly that it is not fair that in the dungeon one can now simply drink a potion and it is gone. Katia adds that Annie was gone before the world ended, thank god.
The hidden illness that ended Katia's adoption bid, and the disease that killed the child she wanted.