I wonder whether this is another example of "the barrier of a common language"? In the UK, in everyday speech, to say someone is deluded does not automatically carry overtones of mental illness, merely that they hold beliefs which cannot be support by evidence, or which fly in the face of evidence. Delusions may be symptoms of mental illness, but being deluded is not the same as being mentally ill. Perhaps the word carries different connotations in the US?