Updated June 13, 1994 12:00 PM

For a woman once revered by the British press, it was a distressing month indeed. On May 1, a photographer surreptitiously snapped the Princess of Wales lounging bare-breasted on the Costa del Sol, and (ignoring the fact that she had pleaded for privacy last December) Fleet Street began wondering how the mother of a future king could have landed in such a scrape. Two weeks later, the tabloids were throbbing with an unflattering tale planted by Prince Charles’s pals, who let reporters know that Diana had lavished $240,000 on personal expenses, including manicures and Evian water, in the year that ended in March.

Never one to let her enemies have the last slur, Di fought back: One day after the spending story broke, a leak to the Daily Mail led to a front page exclusive about the princess helping to rescue a tramp who had nearly drowned in a Regent’s Park lake. On the same day, the press got hold of details about Charles’s finances and reported that the tab for his own indulgences (including six Savile Row suits and an Aston Mar-) was a dizzying $650,000—$410,000 more than his estranged wife had spent.

The spin control continued until May 27, when Diana flew to Geneva for a meeting of the new Red Cross Advisory Commission to formulate international policy. While it was hardly a return to public life, the one-day mission briefly muted the public debate about which of the Waleses was more self-indulgent—and about whether Diana is becoming an additional liability to a family that has never lacked for embarrassments.

Unfortunately what the low-key outing couldn’t do was erase the images of Di’s idyll at the luxurious Hotel Byblos Andaluz. Determined to live like “a normal person,” as she has put it, she discovered just how trying civilian life can be. The trial began on April 29, when Di, along with Sloane Ranger pals Kate Menzies, 33, and Catherine Soames, 35, arrived in Malaga, Spain. Unaccompanied by detectives (whom she officially dismissed in January), the princess and her friends joined other tourists in the taxi queue. After arriving at a tennis “ranch,” where they were all booked into one room, the three were aghast: “It’s a flea pit,” Di told her companions.

Enter hairdresser George Guy, a Brit who runs the ranch’s salon. Recognizing the distressed-looking princess, he offered to ferry her to the five-star Byblos nearby. Without missing a beat, the Queen’s daughter-in-law and her chums piled into his Ford Escort. At the Byblos, Diana called Guy, 45, her “knight in shining armor” and asked him to chauffeur her to the airport on Monday.

Alerted by a TV crew that had spotted Di on the plane, reporters swarmed to the Byblos, where Di took a sunbath on Saturday and, to their glee, followed local custom by discreetly removing her top. From a nearby sun bed where his camera was hidden beneath a towel, Spanish photographer Juan Carlos Teuma zoomed in on the princess, who was lying on her stomach. When she sat up, he squeezed off several shots before she managed to cover herself.

On May 2, when Di’s party left the hotel, reporters followed; with no security force in evidence, one pursued her so hotly that he nearly ran Guy’s Escort off the road. The next day, Di learned that Teuma’s photos were on the market; outraged, she told the Daily Mail’s Richard Kay that being snapped bare-breasted was “like a rape.” (On May 4, Hello! magazine bought Teuma’s negatives for an undisclosed sum and—perhaps as a bargaining chip for a future scoop—promised to lock them away.)

As upset as Diana may have been, veteran palace watchers were even more perturbed. How, they wondered, could she have thought that it was possible to elude the press? And why would a woman who begged for “time and space” have challenged Fleet Street by going topless?

Absurd or not, the flap underscored the fact that since relinquishing her official duties on Dec. 2, Diana has seemed to Windsor watchers like a woman adrift. Since the Palace has turned its back on her, she has no one to help head off faux pas like the incident in Spain. And after giving up her much-loved charity work, she seems to be at a loss. Now that princes William, 11, and Harry, 9, are at school, Di’s role as a mother is hardly enough. In a sympathetic story on March 3, the newspaper Today observed that any woman in her position might feel at sea. “Shorn of her children,” it said, “with no man in her life, jobless, and in a home she now abhors,” it observed, “she is a rudderless vessel.”

Sources close to Diana say that she has seemed mercurial of late: Although it was her idea to dismiss her detectives, she finds it hard to handle the press without them. On a March ski holiday in Lech, Austria, she shouted at French lensmen on the slopes and raced down the mountain toward paparazzi, screaming for them to go away. And in mid-April in London, diners at fashionable Daphne’s were aghast when she ran outside to confront a photographer who had snapped her from the sidewalk.

Even Prince William, it seems, can set her off. According to Today, the boy was “appalled” when he found Di reading a Jackie Collins novel. “After he lectured her,” a friend told the paper, “she flew into a rage—[saying] that [his] father was filling his head with Shakespeare.”

Says one longtime Di watcher: “Diana is highly unstable at the moment—I think she’s shot to ribbons. In conversation, she comes across as hyper.” Adds Ross Benson, author of a recent biography of Charles: “She’s been unwell from the start. She brought a backpack of problems into the marriage, and the situation she’s in now exacerbates her instability. She’s prone to tantrums, and she gets mood swings.”

In Diana’s defense, her brother, Charles Althorp, 29, claimed, in an interview with Inside Edition, that the press—rather than Diana—was to blame for the breakup of her marriage and that she was wounded by the intrusion in Spain. “[The public sees] a very glamorous lady in the papers…and they believe she likes it…you forget that the criticism really hurts.”

But Benson, at least, claims that Diana has a fatal attraction lo the press that may have led her to create a stir in Spain. “She must have known the consequences of going topless—she’s not new to this game,” he observes. “She needs media attention to give her a sense of her own identity. [The irony is that] she complains bitterly about the press, yet she courts certain members of it.”

Indeed. The alliance that has raised eyebrows—and provoked envy—on Fleet Street is her friendship with the Daily Mail’s Richard Kay. Described by a colleague as “an urbane, personable, good-looking guy,” the 38-year-old bachelor befriended Di during her trip to Zimbabwe in July 1993. “He has become a sort of self-appointed press secretary,” says a veteran Palace watcher. “He gives her unqualified support, and she gives him inside information.”

On May 3, Diana and Kay were photographed ducking into her green Audi in front of Harrods, where she gave him the scoop on her “bloody awful weekend” in Spain. Kay insists the rendezvous was not prearranged and denies slanting his stories. “One chance encounter doesn’t turn me into a press officer,” he says.

Perhaps not. But it was Kay who, on May 19, broke the story about Di coming to the aid of one Martin O’Donoghue, 42. In a story headlined “Diana Rescues Drowning Man,” Kay reported that she was being driven through Regent’s Park when someone flagged down her car and reported that a man had fallen into the lake. Asking her driver to phone for help, Di scrambled down a bank with Finnish opera student Kari Kotila, 29, who jumped in after the unconscious O’Donoghue, a vagrant who later admitted he had been drinking. When O’Donoghue was onshore, Di helped roll him onto his side to prepare him for artificial respiration, which Kotila then administered.

In any case, even observers sympathetic to Di believe that her alliance with Kay has pointed up her vulnerability and lack of judgment. They note that she encouraged friends to speak to Andrew Morton—whose Diana: Her True Story helped alienate the Windsors forever—and that unburdening herself to Kay could lead to a similar embarrassment.

By all accounts, Diana is in need of levelheaded advice. Best friends Soames and Menzies are, says Hoey, “playgirls about town.” Menzies runs a party-planning business, while the divorced Soames is an heiress to the Jardine Matheson conglomerate. Both, says one insider, are “rich girls who don’t know how to fend for themselves.”

Older and wiser friends are few. Di’s confidante Lucia Flecha de Lima, 53, moved to Washington last November when her husband, Paolo-Tarso de Lima, Brazil’s ambassador to Great Britain, was transferred to the U.S. And according to the Daily Mirror’s James Whitaker, Di recently had a “bitter, stand-up row” with former mother confessor Mara Berni, 58, proprietor of the restaurant San Lorenzo. Ironically, however, Diana has found a new ally in the 64-year-old stepmother she once abhorred. The princess has met Raine, Countess de Chambrun, for lunch three times in the past few months and, says a friend, has come to appreciate her “wisdom…and great humor.”

As one insider tells it, Diana’s enemies at the Palace are privately pleased with her public escapades. “[Courtiers] have been accused of dirty tricks in the past,” he says. “They now see Di as doing the job herself. She’s her own worst enemy.”

The one area in which Diana’s in-laws seem to have exerted influence is security. Alarmed by incidents like one on Jan. 14 in which she was mobbed at a Royal Ballet performance, the Palace reportedly has asked Scotland Yard to put her under secret surveillance. Her code name: Pink Panther.

By all accounts, her relationship with Charles is as acrimonious as ever. Curiously, his friends’ leak about her expenses (including a reported $2,500 for facials and $1,800 for aromatherapy) seems to have backfired. Not only was Charles revealed to be a lavish spender himself, but her friends noted that since Di—whose private fortune is estimated at $10 million—pays many of her own bills, his outrage seemed excessive. Like many female journalists, the Daily Mail’s Lynda Lee-Potler came to her defense. “[Di] has only done what many a woman does when her emotional life is bankrupt, her sex life is nonexistent and she feels unloved,” Lee-Potter wrote on May 18. “She’s sought satisfaction in clothes, makeup, beauty treatments and holidays…. She’s tried to fill her increasingly empty life.

If there is a cure for Diana’s presumed malaise, royal watchers believe it may involve returning to public life—at least part-time. Di herself has hinted that she may not be in retirement forever. On April 27, she made a surprise appearance at a lunch for the charity Help the Hospices. When newsmen asked whether they would be seeing more of her, she said coyly, “You may be.”

Those addicted to seeing the princess as a working royal were heartened by the fact that on June 3 and June 5 she was scheduled to make a rare appearance with the Queen at D-Day ceremonies in London and Portsmouth. And her May 27 trip to Geneva raised hopes among supporters who believe that charity work could help get her back into the mainstream. But while her Red Cross brief is that of part-time roving ambassador and will include trips to observe relief efforts, her workload is light. Her missions are expected to claim no more than a few days a year, and the Palace reportedly wants to “keep the lid on her Swiss role so she can’t upstage Charles once again,” according to a recent story in Today. As the paper’s Chris Hutchins put it on May 5, “It’s a restart, but it’s not enough. Diana needs to work. She’s drifting…and is in danger of making a fool of herself. That would be a tragedy—for her and for us.”