^Yup, although the recovery mess-ups also had a lot to do with why he also didn't do so hot lol.
Diddy's weird, it's annoying because the usual thing that works against shielders (crossing up) doesn't normally work in this case. If you have a projectile, this is often a goooooooood boon to this MU (with Lucario it's almost golden), I'm not sure about the startup of sheik's needle animation, but if it's as fast as Lucario's/faster, you can hit him with needles everytime he glide tosses to disrupt his followup potential and make a favorable trade (if you have enough needles and do this often enough, he's going to think twice before throwing out his bananas for setups lol). Unlike AS though, you have an even better leverage for when Diddy mixes it up and starts to air toss over, since needles are waaaaaaay better at trapping landings. Put a banana behind you, iirc Sheik's upward throw is kinda weak which means diddy still has access fairly easily, but create that wall by either placing one of the bananas behind you or holding it and using needles in tandem. Get into the habit of picking up bananas you would land on by air dodging, since sheik falls fast you're going to need this pat down lol. I wouldn't try touching diddy's shield much in this MU, and if I do, I would do a lot more baiting, since all of diddy's options can be hefty on impatient opponents (fair is super annoying lol).