Final answer:
A patient presenting with unilateral ptosis, "down and out" gaze, and diplopia, but retaining normal pupillary response is likely experiencing an oculomotor nerve palsy, where the oculomotor nerve's function is compromised but the pupillary reflex is preserved, commonly due to diabetes-related microvascular damage.
Step-by-step explanation:
The patient with diabetes mellitus (DM) and unilateral ptosis, "down and out" gaze, diplopia, and normal pupillary response is most likely experiencing a oculomotor nerve palsy. The oculomotor nerve innervates the majority of the extraocular muscles, including the levator palpebrae superioris which lifts the eyelid, as well as the muscles responsible for most eye movements except for those enabled by the lateral rectus and superior oblique muscles. A palsy of this nerve leads to a characteristic "down and out" position of the eye due to unopposed action of the lateral rectus and superior oblique, which are controlled by the abducens and trochlear nerves, respectively. The normal pupillary response indicates that the parasympathetic fibers of the oculomotor nerve may be intact, which is often the case when the cause of the palsy is microvascular, such as from diabetes, affecting the peripheral part of the nerve but sparing the centrally running pupillary fibers.