I say neither.
I truly think her downward spiral is a result of the fact that she was depended upon for years to guarantee a level of safety that Buffy couldn't provide, with magic. In the first 2 seasons, Giles is adamant that she stay away from magic and warns her of its many dangers. But once it's established how talented and powerful she is, (after she restores Angel's soul), the gang begins to lean more and more on her skills.
We know from canon that magic has properties which can draw a witch in so far that she loses herself in the process, and at the very least becomes addicted to spells. I'm not saying that Willow herself isn't to blame at all; I mean when someone is addicted to heroin you can't say that they bear no responsibility. But the difference here is that people's lives depended on Willow for years and she was truly counted on to perform these highly addictive rituals and, as expected, succumbed to the dark side of them.
Furthermore, from a strictly psychological perspective, Willow's own identity was so tied up in magic. She truly felt that it was her duty in life to stay by Buffy's side and fight the forces of evil with her gift. Having spent years working to get into any school of her choosing, she gave it all up--all of her prior ambitions--for this cause. As she develops into a young woman, her entire sense of self is based on the notion that she can help others with her gift. She's made personal sacrifices in order to do it.
Add to that the fact that all of her loved ones very vocally ask for her help on a regular basis, and you have a recipe for addiction even withOUT the naturally addictive properties of the thing itself.
I mean, it's the story of Anakin Skywalker, if I remember Star Wars correctly. Initially his intentions were fully noble and commendable; he wanted to save his people, (planet, I think? You know what I'm talking about), and he became a Jedi Knight. All of the mind tricks, the power, could be used for good or for evil and eventually he succumbed to them. After suffering personal tragedy, he became Darth Vader. I have no doubt that Willow's story was highly influenced by this; the parallels are so clear.
So anyway. Not mentally ill, not evil. A girl who started out with truly noble intentions and got sucked into the "dark side" after the addiction took a hold of her, and suffered the loss of Tara. This theory doesn't mean she isn't responsible for her actions, of course. It just makes them more understandable.