Right now, I'm assuming Barbara is back cos she knows James has been released/escaped. The natural assumption is that she's back to protect Babs, although I suppose she could be working with James, if Gail was gonna go down an especially dark road.
Oh yeah, and option 3. James is actually better and Barbara knows but doesn't know if Babs and Jim are ready to accept him yet. Maybe his bumping into Alysia is a genuine coincidence and his looking all creeepy is just Gail playing into everyone's expectations. Hey, she's turned one of the Joker's henchman in to a good('ish) guy, nothing's impossible.