Okay, this is a weird theory, so brace yourselves. What if Richard and Sara Newman are Elders (or even Archons, Great Elders, Next Generation), but their minds have been... "reprogrammed" so that they think that they're ordinary, powerless humans that see the world like average humans do? This would help them to raise Sophie and Josh away from the Dark Elders and to keep them safe from the power struggles until it was time. They wouldn't have to hide anything from their children because, to them, there is no secret.
Like I said, a weird theory. I wonder if there are any spells that allows you to erase, reprogram, or simply alter someone's mind, or the minds of Elders at that.