Diana died on the last day of August 1997, so she was alive a full eight months of that year. I can totally believe that there were weeks and months of that year that she and Charles were on good terms but I am not going to conclude that Diana and Charles were friends / on good terms on a sustained basis.
First of all, it was Diana's MO to be on good terms with someone until she wasn't - that was chronicled not only with Charles but also her parents, siblings, employees and close friends.
Secondly, Diana started the year organizing and then filming an interview where among other things she makes it clear that she does not want Charles to become King. The process started in January but she actually did the interview in March, so it was not like this was a rash act. Note this is a different set of tapes than the Settelen or Morton tapes and the tapes have been reported on but have yet to air.
Thirdly, and this is conjecture on my part, but I think that when Diana was photographed with Dodi clearly showing that they were in a romantic relationship, she knew she was being photographed and wanted to be photographed with two motives, one being that to get Hasnat Khan's attention and the second was to compete with the media coverage of Charles throwing Camilla a 50th birthday party at Highgrove.
I think that Diana was OK with Charles himself and the Charles and Camilla coupling as long as she herself was happy in her own romantic relationship, her image in the media was positive and there was not even the slightest whiff that Charles would be able to ascend the throne with Camilla being a fixture in her life. In fact, as I mentioned above, in the tapes that she made earlier in the year she allegedly made it clear that she did not want Charles to become King. She expressed similar sentiments in either the Settelen or Morton tapes.
Yeah I can believe that she and Charles had positive interactions in 1997 but again I would not conclude that Charles and Diana were friends / in a good place on a sustained basis. Whatever amiability they had with one another was ephemeral and was always going to be that way as long as Camilla was part of Charles' life and Charles did not have to "abdicate" for the woman he loved IMHO.