In 1861–62, he was the subject of a "lunacy" case after he married a woman of whom his uncle did not approve, causing his family to claim that he was incapable of managing his affairs.

[2] A spendthrift, Windham frittered away his considerable fortune and, facing legal fees of £20,000 from the case, was forced to declare bankruptcy and sell Felbrigg Hall.

[3][7] Windham was educated at private schools from the age of eight, from one of which he was ejected for foul language, before entering Eton College in 1853.

[10][11] In 1861–62, after his marriage to Anne Willoughby, of whom his uncle did not approve, Windham was the subject of a noted "lunacy" case in which it was argued that he was incapable of managing his own affairs.

It was the longest and most expensive lunacy case in English history[13] which contemporary press reports attributed partly to the per diem pay of the jury which gave them no incentive to work faster.

[17] Contemporary press opinion was that the case threatened to set a dangerous precedent and become a threat to liberty if someone was declared a lunatic merely because they lived a dissolute or immoral life.

[3] He moved into the Norfolk Hotel in Norwich but his dissolute ways continued and he eventually set up as a coach driver.