Hurley was never crazy at all. He has always only been able to see dead people.
In Libby's story to Desmond, she said that her dead husband's name was David. This is the Dave from the mental institution. He was there because after he got sick and died, Libby had a mental breakdown, gave his boat away, and committed herself. Hurley, who happened to see dead people but not know it, and ghost Dave got along because Dave was thinking "Hey, someone can see me!"
Why did the Dave on the island try to get Hurley to kill himself? Because he was about to start shacking up with his woman!
It was said at the time of Libby's death that her story could be told through the flashbacks of a not-yet-introduced character. I think that this character was Miles and that it was one of the episodes that we lost due to the writer's strike.
In Libby's story to Desmond, she said that her dead husband's name was David. This is the Dave from the mental institution. He was there because after he got sick and died, Libby had a mental breakdown, gave his boat away, and committed herself. Hurley, who happened to see dead people but not know it, and ghost Dave got along because Dave was thinking "Hey, someone can see me!"
Why did the Dave on the island try to get Hurley to kill himself? Because he was about to start shacking up with his woman!
It was said at the time of Libby's death that her story could be told through the flashbacks of a not-yet-introduced character. I think that this character was Miles and that it was one of the episodes that we lost due to the writer's strike.