Questions

Lucy has been diagnosed with Cat Flu but I'm not sure if it is or not.

She does have watery eyes, but just clear fluid like tears, not discoloured or anything and her eyes aren't watering that much.

Same with her nose. Her nose is running and obviously blocked but it is clear discharge. Any time I've seen a cat with cat flu they nearly always have a yellow discharge from their nose and eyes.

Another strange thing is, the last time she was ill she put up the third eyelid. She hasn't done this once in the last week. In fact, her eyes are quite bright.

Is it possible she is having an allergic reaction to something and if so, how would I find this out?

I would be suspicious too given the clear, watery discharge ... usually with the common upper respiratory viruses, you do have a yellow to yellowish-green discharge ... I am not a vet, but my gut feeling would be allergies. Do you have a feline-only specialist vet in your area? Maybe he/she could give you a second opinion?

Second opnion is my thought too