My 94 yr old mother was very independent before contracting covid a year ago yesterday. To date we are dealing with a new obsession. Advice?

As for the oxygen.
It is drying make sure her nasal area is not drying out. There are things that can be used to provide moisture.
One of the effects of COVID is or can be is reduced lung capacity. So even if she has oxygen on it may feel like she is not getting enough so she might fiddle with the tubes or the canula. If you do not have a meter get one to check blood oxygen.

As for the brief. ("diaper")
Some of them can feel rough.
I would put a bit of barrier cream or ointment around the legs and maybe even around her waist. Do not use a lot and do not smear it on just pat it onto the skin and not much. The more you put on the more difficult it is to clean the area.
that bit of lotion might protect her skin from getting irritated. What might be happening is if the area is a little irritated from the rough edges of the brief and urine gets to that irritation it can cause burning, itching.
To keep her from removing the brief if she wears PJ's sew a snap or Velcro to the top and bottom and attach them so it is difficult for her to remove them. Or there are adult "onsies" that you can get. They do make changing her a bit more difficult for you as well.

Try a bigger diaper. Having the elastic rubbing on the same spot all the time could cause irritation that you can't really see.

Give up trying to figure it out. My mom is sliding into dementia and cannot carry on a thread of conversation any more. It's sad and annoying at the same time. It's NOT her fault, but, wow, it's hard to take. If you try to 'remind her' that so and so died or something didn't happen the way she remembers, she gets mean and mad. So sad.

Both my grandmas kept their wits to their dying day. What mother is going through...I can't deal with it. I think, partly b/c I am afraid I will become just the same.

A few months ago she was obsessed with her oxygen being off or on, always checking and asking for it to be checked. Now this past few weeks it about her diaper. She claims it is too tight, giving her a rash and making her leg hurt. She is removing her diaper at night for different reasons. We are lost at what to do about this.

What obsession?
It is possible that whatever it is it may have become an obsession with or without COVID.
Obsessions can become common with dementia.
A little more info might help