Barmy Sheila, very much so according to Morse (5)
I believe the answer is:
dotty
'barmy' is the definition.
('dotty' can be a synonym of 'barmy')
I cannot understand how the rest of the clue works.
(Other definitions for dotty that I've seen before include "Slightly mad (colloq.)" , "Eccentric, slightly mad" , "like a Dalmatian?" , "Bonkers; speckled" , "Barking" .)