If the phrase had been
To all students who participated in the workshop on Monday...
instead of
To all students who participated in/on Monday's workshop...
I suspect that you wouldn't have had any trouble identifying "in the workshop" and "on Monday" as the correct prepositional phrases. If so, the key question here is, Which preposition controls when you rephrase "on Monday" as a possessive and position it in front of "workshop"?
The answer to that question is evident from the fact that when you reword "on Monday" as "Monday's," the preposition on disappears: "the workshop on Monday" and "Monday's workshop" are interchangeable. As a result, you don't you don't have to choose between in and on at the beginning of the combined prepositional phrase; you simply insert "Monday's" between "in" and "workshop," and drop the "the." Thus, "on Monday" (in the form of "Monday's") joins the existing prepositional phrase "in the workshop" as a subordinate element.