This is what I found. My thoughts...if in doubt, DON'T USE IT!

Butterflies often lay their eggs on plants, and when those eggs hatch the little caterpillars will stay and feed on the plant as they grow. Caterpillars can be controlled using a common organic insecticide known as Bacillus thuringiensis, or Bt. Bt is a naturally occurring bacteria that causes caterpillars to stop eating and die. There are several varieties of Bt that can be used, depending on the type of caterpillar you’re after, including one specific to Colorado potato beetle larvae and another for corn earworms. Bt is also effective against tomato hornworms, the little green worms that like broccoli and cabbage, and bagworms. Bt should be applied at 1-2 week intervals to kill succeeding generations of insects. Gardeners with butterfly gardens should avoid using Bt on their plants because it is harmful to butterfly caterpillars. However, Bt is completely harmless to pets and people.

Diatomaceous earth is another natural insecticide that may be used on a variety of insects. Diatomaceous earth is a fine powder that feels like talc, but it is actually the fossilized skeletal remains of small aquatic critters called diatoms. It is completely harmless to people and pets, but when soft-bodied insects come in contact with it, the tiny sharp edges of the diatoms lacerate the insects, making them dehydrate and perish. Apply diatomaceous earth in the early morning or evening when the plants are wet with dew, which will make the powder stick to the surface of the leaves and doom the insects that walk through it. Diatomaceous earth can be used to control ants, aphids, beetle grubs, box-elder bugs, flea beetles, those nasty little earwigs and many more insects. It’s also safe to use on houseplants, and can even be sprinkled on the ground to control slugs.

http://gardening-articles.com/controlling%20insects%20organically.htm

Outdoor insects affected by Diatomaceous Earth include:-

ants, caterpillars, cut worms, fleas, ticks, cockroaches, snails, slugs, spiders, termites, silver fish, lice, mites, flies, centipedes, earwigs, aphids, beetles, fruit flies, lemon tree borer, borers, thrips, pysllid etc..

http://www.greenurbanliving.co.nz/diatomaceous-earth-for-natural-insect-control/

And from the manufacturer: (look half way down where I bolded, italicized, and starred)

While Red Lake Diatomaceous Earth works well to kill most crawling insects, there are a few species that DE is known to be especially effective against. These include:

• Ants

• Bedbugs

• Fleas

• Cockroaches

• Silverfish

• Flour Beetles

• Darkling Beetles

• Grain Beetles

• Carpet Beetles

• Colorado Potato Beetles

• Caterpillars *******

• Earwigs

• Centipedes

• Millipedes

• Sowbugs

• Pillbugs

• Spiders

• Crickets

• Slugs

http://www.absorbentproductsltd.com/diatomaceous-earth-insect-list.html

Many thanks for your input.... I have a website about this wonderful product... I have used it for years... but I was uncertain about the butterflies....
I like your answer....if in doubt, DON'T USE IT!
Thanks again,
Cindy

I'll agree that DE a broad spectrum pesticide that requires careful use in the garden. I don't recommend using it at all outside, as a matter of fact, as the balance of the beneficials versus the pests can be fragile.

I don't even like to see it used on the ground because of all of the beneficial insects that live in or near the soil. :-(

I use DE in my garage to kill black widow spiders, though. EEEK.

DE also kills fleas and other creepies in the house, I think.

I tried for a whole season to use DE to kill spiders, even black widows. I found them 3 days later walking around with white bodies- as I got them good. But they didn't die. I couldn't get rid of them until I finally resorting to using Eliminator Home Insect Killer. Now they are under control.