On September 23, 1994, at 2123 eastern daylight time, a Piper PA- 32-260, N55DH, registered to W Transport collided with the terrain during an ILS approach to the Vermillion County Airport, Danville, Illinois, while on an instructional flight. Instrument meteorological conditions prevailed and an IFR flight plan was filed. The airplane was destroyed. The CFI received minor injuries. The private (instrument student) pilot and one passenger received serious injuries. The remaining passenger was not injured. The flight originated from New Hudson, Michigan, on September 23, 1994, at 1945 edt. The accident occurred on the return leg of a flight which had departed Danville for New Hudson earlier in the day. The CFI reported receiving two weather briefing prior to the departure for New Hudson. The CFI stated she went along on the trip to provide instrument instruction and because the weather was going to be IFR. The flight to New Hudson was uneventful. Prior to the return flight, the CFI called the Lansing Flight Service Station (FSS) to file an IFR flight plan and to receive an "update" on the weather conditions. The briefer provided the updated current weather along the route and stated the forecasts had not changed. The flight proceeded uneventfully. While en route and talking with the Chicago Air Route Traffic Control Center (ARTCC) the pilot was advised to change frequencies to the Kankakee sector radar controller (IKK-R). Six minutes after the frequency change, the IKK-R controller broadcasted Convective Sigmet E to all aircraft. The sigmet was as follows: Convective Sigmet E, valid til 0255Z for Illinois, Indiana, Kentucky, Tennessee, for 50 west of Lafayette, to 30 east southeast of Indianapolis, to 20 southeast of Nashville, to 50 west of Lafayette area of imbedded thunderstorms moving from 180 degrees at 25 knots tops to 38,000 feet. Two minutes later, N55DH contacted Flight Watch and reported back on the controller frequency four minutes later. At 2113, N55DH checked in with Champaign Approach Control (ATCT), was instructed to obtain the Decatur AWOS and to expect the ILS approach to runway 21. N55DH responded that they had the Danville AWOS. N55DH was told to expect the ILS to runway 21 and was subsequently given vectors for the approach. At 2114, N55DH contacted Champaign ATCT and requested information regarding the intensity of the rain they were experiencing. Champaign ATCT replied, "I'm not showing it, so it's not real heavy." N55DH replied, "All right then every once in a while we'd get a little lightning flashes out of it, we were wonderin' [if it's the] imbedded (unintelligible) stuff they were reporting earlier." N55DH was issued another heading and cleared for the ILS approach. The CFI and student pilot both reported that shortly after receiving the first approach vector, they encountered rain and light to occasional moderate turbulence. They stated that once established on the localizer the rain became heavier and as they intercepted the glideslope, lightning started. Just after beginning their descent, both pilots reported, a "brilliant flash of lightning" occurred at which time flags were received on both the localizer and glideslope. During a telephone interview, the CFI stated the student was flying the airplane and as the flash occurred she stated, "Let's go" indicating to him to break off the approach. She stated that simultaneous with this happening the airplane contacted the terrain. She stated the last altitude she remembered seeing on the altimeter was 1,700 feet. The airplane impacted a corn field approximately six miles northeast of the Vermillion County Airport, south of the localizer course for runway 21. The CFI stated they did receive the Sigmet information from the IKK-R controller but thought it was for an area west of Champaign, Illinois, instead of Lafayette, Indiana. She also stated that although they attempted to contact Flight Watch, they were unable to because of the numerous other calls Flight Watch was receiving.