My Mother has slight dementia and now seems obsessed with certain things.

Also check Mom out for an urinary tract infection or any other type of infection.

When my Dad started seeing ants on the wall and in his food, he saw his doctor who found Dad had a lung infection. The ants went away not long after the antibiotics started to work.

She is well past early dementia. If she is seeing bugs, she may have macular degeneration. If she is feeling bug bites, she may have neuropathy; have her checked by a good neurologist.

We tried Aracept earlier this year to try and slow her progression and she had severe hallucinations , so needless to say stopped that immediately. I just wanted to know if this is a normal progression and it appears it is. Thanks for all the answers, trying to adjust to the new her

my mom drowned her plants, seeing bugs and thinking she had bug bites. Obsessions about All kinds of things is common.
Hiding things and then forgetting and blaming others for them missing.
Never argue, or try to show them they are wrong.
make sure they are physically well and pack your bags for this 'interesting' ride of patience...
maybe its time for Namenda or Aracept? talk to her dr about her symptoms.

Here is one previous posting with this question. There have been a number over the years, because "bug bites" are not rare.

https://www.agingcare.com/questions/mother-in-law-insists-bugs-biting-her-170446.htm

"Slight dementia" is like "slight pregnancy." Once the condition starts, it progresses.

Each case is unique, but there are common symptoms and frequent behaviors. No one person with dementia will exhibit all the possible symptoms, but knowing the range of possible symptoms can help a caregiver take things more in stride when they happen.

OCD and feelings of bugs crawling on you are common symptoms. You need to research dementia symptoms to get more knowledge of what to expect. Just Google it so you have a better idea of what you're dealing with.