karendee, I'm also in HR and I'm on intermittent FMLA. My rheumy is the one who filled out the paperwork and her office actually told me to write down whatever I wanted them to include. I asked them to say that I needed to work intermittently when in a flare and that's exactly what she wrote. If there is something specific you feel they need to say in order for it to get approved, just ask them.
You shouldn't be charged for the days you worked from home and you need to tell them that. We have many employees who have worked from home when recovering from an illness and they were counted as work days. Also, just tell your boss that you are not comfortable with your coworker seeing your personal health information. I had that situation once before with a supervisor and the HR manager made sure that the information was only seen by her. But, if it's stuck in your file somewhere, the coworker will be able to see it anyway if she has access to those files. So, it all depends on how much you are willing to fight to keep her from seeing it.