Not long after that interview, Charles and Diana would officially divorce. Walters said the queen insisted on the divorce after that interview.
Walters said she had lunch with Diana after the interview with Bashir was taped but before it had aired. She said Diana did not mention it.
The next year, the princess sent Walters a Christmas card with a picture of her two boys and their cousins Eugenie and Beatrice. Just a card like any regular mother would send, Walters said.
Kensington's Long Royal History
Kensington Palace has been home to royalty since it was built more than three centuries ago.
Monarchs were born and bred at Kensington. Members of the royal family still live here, including the prince and princess of Kent, the duke and duchess of Kent and the duke and duchess of Gloucester.
Undergoing renovations, the building will be what officials call an "enchanted palace theme."
It was at Kensington that Queen Victoria was born, christened and became queen. When Victoria was 18 years old, she went to bed one night a princess and woke up the next morning a queen. Her reign from 1837 to 1901 was the longest in British history. Today on display in her bedroom is a William Tempest dress and several marionettes.
Visitors to the state apartments would enter through the king's staircase. "I always love this place because it's a bit like walking onto an opera set," said Alexandra Ken, curator of historic royal palaces. The walls above the stairs are painted with a huge mural depicting King George I and his royal court; the floor is black-and-white tile.
The palace also includes a throne, or the presence room. Visitors were required to bow or curtsy to the throne, even if it was vacant when they entered.
The palace has its share of oddities: Inside the King's Quarters are several paintings and statues of bare-breasted women. And like many members of the royal family, Queen Mary II, who ruled in the 17th century, loved dogs. In her quarters she kept for her canine friends a series of little dog baskets, all lined in red velvet.
Princess Margaret, sister of the reigning Queen Elizabeth II, also lived in Kensington Palace for more than 40 years. She lived in various apartments until her death in 2002.
India Hicks, a bridesmaid at Diana's 1981 wedding, said she spent the night before that wedding at Kensington on Princess Margaret's insistence. Hicks said she was separated from her mother after the royal fireworks, a tradition on the night before the heir to the throne is wed.
"Late I heard a knock on the door and Princess Maragaret came in with her toothbrush. She said, 'Here my dear, use my toothbrush,'" Hicks said. "I didn't want to say no thank you, the idea of borrowing her toothbrush was intimidating, but I accepted the gesture."
"Can you tell us if William and Kate are going to be living here?" ABC News' Nick Watt asked an official. "I'm afraid I can't," he said. When asked if she knew, Ken said with a laugh, "No, I'm afraid I really don't know."
ABC News' Andrew Springer contributed to this report.