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In the narrative of Mulholland Drive, the question of whether Diane Selwyn "really" won a jitterbug contest depends on which layer of the film’s reality you are analyzing. However, according to the biographical details Diane provides in the "real" portion of the film (the final third), yes, she did win a jitterbug contest.
Here are the specific details regarding this event:
The film begins with a surreal, brightly lit, and heavily stylized montage of people dancing the jitterbug against a purple backdrop. During this sequence, a superimposed image of a smiling Betty/Diane appears, flanked by the elderly couple (later identified as Irene and her companion). This sequence is a dreamlike abstraction of the moment Diane won the contest, which served as the "high point" of her life before her descent into the darkness of Hollywood.
In the first two hours of the film (the dream sequence), the character of Betty Elms tells her landlady, Coco, that she came to Los Angeles because she won a jitterbug contest in Deep River, Ontario. In this version of the story, the win is presented as a wholesome, "shining star" moment that launched her journey toward stardom.
During the dinner party at Adam Kesher’s house (the "real" timeline), a bitter and dejected Diane Selwyn recounts her history to Camilla Rhodes and the other guests. She confirms the same story:
While the film confirms she won the contest, it uses the "jitterbug" as a symbol of Diane's tragic trajectory. The contest represents her naive optimism and the "old-fashioned" Hollywood dream.
By the end of the film, the "jitterbuggers" reappear as tiny, haunting figures (along with the elderly couple) that crawl under Diane's door. In this context, the memory of her win—once her greatest achievement—becomes a literal demon that drives her to her breaking point, representing the massive gap between her youthful success in Ontario and her ultimate failure and moral decay in Los Angeles.
No oversights detected.
Yes, in the 'reality' timeline of Mulholland Drive, Diane Selwyn explicitly states that she won a jitterbug contest in Deep River, Ontario, which inspired her to pursue acting. This is revealed during the dinner party scene. The film also opens with a dreamlike visual of this contest. However, contrary to the AI summary, the character Betty Elms does not mention the jitterbug contest to Coco in the dream sequence; she only mentions coming from Deep River.