"It's been horrific and so sad," a source tells PEOPLE of the situation. "Every day something has been in the news."
Ex-wife Denise Richards has done her best to protect Sam and Lola" – their daughters, ages 6 and 5, "but it's been very challenging. She can only keep so much from them," the source says.
Noting that Richards, 39, "still cares about [Charlie] a great deal," adds the source, "all she wants is for him to be healthy."
As for Richards herself, the actress has remained mostly mum on the ongoing matters with the 45-year-old star of Two and a Half Men but Tweeted Friday, "this is a private matter."
Another source says that Sheen's twins Max and Bob, nearly 2 years old, are home with their mom, the actor's ex Brooke Mueller. They are being cared for with the help of a nanny.
"Their grandparents [arrived last night]," this source says. "The boys are doing great and are too young to know anything about their father and his antics."
Reporting by LINDA MARX