The diabetes and thyroid are not likely directly linked in this case - both common endocrine disorders, but thyroid dysfunction can worsen glucose control in diabetics and hyperthyroidism especially worsens insulin resistance (diabetes).
She may have not had a full-response to the radioactive iodine and is becoming hyper again. Another dose of RAI or surgery to remove the thyroid may be needed as definitive treatment. May be worth a second endocrine opinion to sort out the options.
Look up information on the endocrine system.