My mom has type 2 diabetes. Could she also have dementia?
It sounds like your mother might benefit from a second opinion, ideally a neurologist, geriatric psychologist or other specialist in memory disorders. There is no clinical disease called "diabetes dementia." Dementia is a word used to describe a cluster of symptoms such as memory loss and problems with cognition. It can have many causes, such as Alzheimer's disease. Having diabetes is increasingly considered a large risk factor for Alzheimer's disease. More people with diabetes develop dementia than people without diabetes. (But having diabetes doesn't mean you will definitely develop dementia.)
Any time that memory and other cognitive issues affect day to day behavior, it's a good idea to have the issue checked out. Stress and medications can affect performance. Your mom should ask her regular doctor for a referral, or consult a memory clinic, such as at a nearby university, on her own.