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Wearing a pink fairy costume, 2-year-old Matilda Rose Ledger took center stage last month in the lobby of a Boston hotel, twirling in her dress as her proud mom, Michelle Williams, looked on. Having fun in their own little world, the pair showed little sign of the tragedy that struck their family earlier this year. "They were spinning in the lobby chairs like the teacup ride at Disney World," says an onlooker at the Nine Zero Hotel, where Williams stayed last month while filming the Martin Scorsese thriller Shutter Island. "They were adorable together."

Six months after Heath Ledger's shocking death, Williams, 27, has focused on maintaining a normal life for herself and their daughter, friends say, even as Ledger's wicked turn as the Joker in the new Batman sequel The Dark Knight is the talk of the movie world. "Now that [the film] is coming out, the feelings might be a little more raw than usual," a source says. "But part of her is pleased for Matilda because it's keeping his legacy alive."

Williams keeps his memory alive in her own way (she became a sponsor of a scholarship in Ledger's name to help struggling Australian actors), especially for their little girl—just as she vowed shortly after Ledger, 28, died of an accidental prescription drug overdose on Jan. 22. Matilda "will be brought up with the best memories of him," Williams said in February. Though she and Ledger had split in 2007, "Heath was the love of her life," says a friend.

The actress and her daughter remain in the Brooklyn house she once shared with Ledger and frequent local shops, including bookstores where Matilda enjoys story time. They have even spent time with Ledger's longtime friend Trevor DiCarlo. "She tries to get a lot of fresh air. She doesn't want her child to feel like a prisoner," says the friend. "So she'll go on little walks, listen to the birds, let Matilda feel the sun."

Williams did not go to The Dark Knight premiere July 14 in New York City, which several of Ledger's family from Australia attended, including his father, Kim. "It's great that his family is here," costar Michael Caine told PEOPLE. (Williams' rep shot down reports of a rift with the Ledgers over his will—which was filed before he met Williams and left his estate to his parents and siblings. Kim Ledger has said Matilda will be "taken care of.") Williams did attend the Cannes Film Festival in May, where she made her first red carpet appearance since Ledger's death. "Michelle's a powerhouse, really smart and together," says Kelly Reichardt, director of her upcoming drama Wendy and Lucy.

But the quiet Montana native prefers low-key time with Matilda to red carpets. In Boston last month, the duo enjoyed swan-boat rides, played at the Children's Museum and went shopping for crafts (Williams loves making scrapbooks). "You could tell they have this real connection because Matilda was like 'Mommy this' and 'Mommy that' in a really sweet way," says an employee at a Boston Paper Source store, where the pair shopped. "Matilda is very happy, really outgoing."

Though Williams stepped out with actor Ryan Gosling and director Phil Morrison after her split with Ledger, a pal says romance isn't a priority for her now: "I'd never even suggest introducing her to anyone. When she's ready, her friends will know." These days, Williams' heart belongs to her little girl. "She'll sometimes let her guard down and say she's sad for Matilda," adds her friend. Still, "she's doing okay. She doesn't want anyone to feel bad for them. She's a very strong woman."

  • Contributors:
  • Reported by Alyssa Shelasky/New York City,
  • K.C. Baker/New York City,
  • Judy Rakowsky/Boston,
  • Reagan Alexander/Los Angeles.