From PEOPLE Magazine Click to enlarge
The images would tear at any mother's heart: a once happy and successful child, sitting disheveled on a sidewalk, her eyes vacant, looking utterly lost. Lynne Spears was not with her daughter Britney when paparazzi captured the star's meltdown on video in 2008. But on Oct. 18 she watched the scene on a screen in an L.A. courtroom. Sitting next to her ex-husband Jamie, she sniffled and wiped away tears as if it were playing out all over again. "This is painful," says Lorilee Craker, who coauthored Lynne's 2008 memoir, Through the Storm. "I feel sad that Lynne and her family are still dealing with this."

In the four years since her public meltdown, Britney Spears and her family have tried to put that nightmare behind them. Now it is back in full view, thanks to a lawsuit filed by a former confidante, Sam Lutfi. The talent manager, who now works with Courtney Love, claims he repped Britney from '07 to '08, and that the 30-year-old singer owes him hundreds of thousands in unpaid fees. He's also suing Lynne, 57, for libel (she wrote in her book that he drugged Britney), and Jamie, 60, for allegedly punching him during an altercation in Britney's home. The Spears clan says Lutfi is a shakedown artist who preyed on a very fragile star. (Sources say she suffers from bipolar disorder.) "Britney is aware of the trial but isn't really asking questions," says an insider. "She's letting her dad and the lawyers handle things."

Spears, who remains under the legal control of her father and her fiancé, Jason Trawick, 40, is unlikely to testify because her conservatorship judge ruled that it would cause her "irreparable harm." But on the trial's first day in L.A. Superior Court, Lutfi's attorney painted a shocking picture of the star at her lowest point. Among the bombshells: Spears abused prescription amphetamines, hid crystal meth in her home, suffered "paranoid delusions" and shaved her head in '07 out of fear drugs would be detected in her hair. Lutfi's lawyer Joseph Schleimer also claimed his client "sometimes spent 24 hours a day trying to prevent Britney from using."

The Spears family isn't denying the pop star was in trouble during the time she knew Lutfi. In his opening statement, Jamie's attorney Leon Gladstone said Britney's 2002 breakup with Justin Timberlake marked a turning point after which she became "depressed and angry." Gladstone went on to say that erratic behavior only worsened when she hooked up with Lutfi, described as a "master manipulator" who allegedly disabled her cars and cut her phone lines. After Jamie was granted control of his daughter's affairs in 2008, Lutfi was ordered to stay away from the star for three years.

Why doesn't the Spears camp simply settle with Lutfi rather than let the past be dredged up? The source close to Lynne says pride is playing a part: "The family does not want to cave in to him."

No one disputes Britney has come a long way in four years. "She's been taking good care of herself," says the family source. She has joint custody of her sons Preston, 7, and Jayden, 6, with ex-husband Kevin Federline, 34 ("She's a very fun mom," says the family source), and she is enjoying her new job as a judge on The X Factor. "She really seems to care about us," says Carly Rose Sonenclar, 13, a contestant on her team. What loved ones say she isn't focused on is the court case. "Britney would just be happy if it ended," says the insider. "That was a bad time in her life."

  • Contributors:
  • Reporting by Ken Lee/Los Angeles,
  • Pernilla Cedenheim/Los Angeles,
  • Jennifer Garcia/Los Angeles,
  • Patrick Gomez/Los Angeles,
  • Alicia Dennis/Austin.