If you want to write fiction involving mentally ill characters in a realistic way, to show how and why they no longer think clearly, you must get to know real people with real psychiatric disorders. There are many places that provide services for these people that need volunteers. Homeless shelters or food kitchens that provide free meals are a good place to start. Many of the homeless exhibit symptoms of mental illness. My recommendation is to work with these people without fear and get to know them. They will exhibit different behavior, but “normal” people have more in common with them than most realize.
If you want to make characters real, they should have psychological needs. However, like “normal” people, their psychological needs will differ. An artist showed me their version of Maslow’s hierarchy of needs. It was an upside down triangle with self-actualization and creativity on the bottom, and food, water, and shelter on the top. I had to laugh because this seems to be painfully true for many creative people. However, those suffering from mental illness will not conform the way society thinks they should. To portray their needs, you must observe humankind, read abnormal psychology texts, and also books from other cultures and periods of time
You can create characters obsessed with creating one thing, characters who are consumed with maintaining an appearance, or those whose goal is to appease their appetites far more than necessary. If the character doesn’t talk much, you must go into the interior thoughts to express what this character is thinking. When people have “altered” their memories they are changing these for a reason. People may do this to protect themselves from past pain, from what they fear in the weaker and baser side of their personality. Many justify themselves, clinging to a world that exists in their mind parallel to the one that we think everybody else sees.
Often the mentally ill character will seem childlike and unable to direct themselves, seeking guidance from people that are less than reliable. They try to find the easiest way to avoid harm, because pain and neglect are common occurrences in their lives.
The mental problems that originate from past experiences must leak into the thoughts of the character or be supplied by other characters, so readers know they are dealing with someone who has gone through a traumatic experience or a mental breakdown. As an author, you want the reader to understand the mentally ill character from their own point of view.