Arwa, I know that you are a lady. But if the phrase is borrowed from the same book as "a palm and five daughters", stop reading that rubbish! :) Well, again it made be red as a beetroot, "diddle" means "to have sex with, and often used with reference to masturbation of the female genitals". If we are talking about the slang again. :)

"Diddling" is slang for "having sex." What book are you reading, man? ; )

There's no cause to worry about. " Diddling " might be " having sex " for a certain group of people and again just only in the slangy terms of speaking but from its face value it means " to cheat somebody " or " to play with (something) ". Ex: " He diddled with the waching machine , but it still wouldn't work ". " I"m not much of a musician , I just like to diddle around." So it could be easily undestood that you are being asked " How's things? "," How are you diddling (playing) around in this life?." For life is a big game and we are the players.

In British English, 'to diddle someone' means 'to cheat someone'. I've also heard this question before and it is a greeting equivalent to 'How are you doing?'. ('Diddling' sounds a bit like 'doing' I suppose.) It is a little bit twee, though.

i've never heard that greeting before but, i wouldn't doubt that it isnt, people make up all kinds of greetings nowadays.