Yes, the kiss goodnight happens after the parks are closed but you will still see a thousand people or so just milling around Main Street and the castle hub area like we did. Actually, i am convinced that the kiss goodnight is shown several times. We got a couple of hotdogs at Caseys and just took the atomsphere all in. Perhaps the ice cream parlor is still open too? The kiss goodnight just SCREAMS disney!! Watching the video the someone just posted gave me goosebumps and welled me up inside. The kiss goodnight is a gentle nod to everyone...."leave the parks now." As the other poster mentioned, if you are at magic kingdom the night of a halloween party and did not purchase a halloween party ticket, you will be asked to leave at 7:00 p.m. and not see the kiss goodnight.
I can highly recommended if your granddaugther's birthday lands on a halloween party, then by all means, attend the halloween party!!!! It has the best parade, completely different and awesome fireworks, best stage show and less attendance in people and no fastpasses are offered. Though Seven dwarfs for us was still a 45 minute wait...ugh! The kiss goodnight will still be presented as well.
Since you haven't been to WDW in 10 years, lots of improvements and attractions have been enhanced...the fantasyland has doubled in size since your last trip and AK is amazing and they will have Avartarland opened. Hope your granddaughter has an amazing birthday at WDW and you're a wonderful grandmother for taking her!