Im sorry but only you can answer your questions as to privacy and such.. you see in life there are three sides to any situation...

the side of p1
the side of p2
and the side that takes into consideration of p1 and p2 (otherwords the actual situation minus each persons mind interpreting the situation with emotions and own experiences.)

Since I am not p1 nor p2 and am not a neutral witness to what is going on I can not say whether one way or the other on issues with p1 or p2,

i can only go on what only one party to the situation has posted either p1 or p2 based on their own interpretation of how they (p1 or p2) see the situation.

what I can tell you is that you do have some options...

P1 and P2 can sit down together and discuss the situation between them
or

since the one having the problem (P1) has a financial income they can choose to not discuss the matter and just go on with life as is

or
since p1 has a finacial income of their own they can choose to move out on their own by their self

or
since p1 has a financial income of their own they can choose to contact services like adult protective services, churches, section 8\hud and other community services that can help them to find their own place with in their financial means for example a one bedroom apartment or motel room or a larger place with a different room mate where the rules and boundaries are discussed before moving in together.

ultimately only p1 and p2 can say whether something is wrong in this friendship\living together situation since they are the ones in the situation.

sure online we can take \pick a side based on our own personal views of what we would like to happen should we be in that situation and based on our own locations rules and such for two parties \friends living together but only the ones in the actual situation can decide based on their own situation\friendship and living arrangements that we on line may not be privy to, knows.

now ...if this was me in my own location.. and I was in this situation I would save my money, contact adult protective services and other community agencies and find my own place rather than losing a friendship by fighting over what what someone can do in their own home, especially if my friend was the first one in the home or owns that residence I was being allowed to rent a room out of. I value friendships over fighting with friends.

as for the sleeping issue I go through insomnia also and there are some great meds and other options that allow me to get a good nights sleep without sleeping my days away rather than enjoying time with my friends during the day time. not saying you should take meds and do the things I do just saying sometimes sleeping during the day actually works against someone who has sleep issues and treatment providers can help with that.

so for my suggestion on this that the one having sleep issues might be able to contact their own treatment provider to find ways that will allow them to get a better night or days sleep.